Jeremy Grantham’s GMO offered a recent presentation talking about climate change and investing at the LSE: http://www.lse.ac.uk/GranthamInstitute/news/the-mythical-peril-of-divesting-from-fossil-fuels/ The main chart that caught my eye was a one on the long-term effect of excluding an entire sector from the index : Basically, my interpretation is that if you decided to exclude an entire sector from your investment
Good breakdown by Credit Suisse (via the Wall Street Journal) on where the US earnings growth is coming from: Oil is good for a small set of companies, bad for the rest. But unless the oil price falls the earnings growth will be repeated in 3Q and 4Q. Taxes are one-off but set to continue
The shoe is on the other foot for a change with a Chinese company (recently listed Contemporary Amperex Technology – the world’s largest EV battery manufacturer) announcing a new factory in Germany yesterday. From Bloomberg: CATL and the state of Thueringia in central Germany Monday announced a plan to build a 16-gigawatt lithium-ion plant close to
June continued to see positive returns across our portfolios, our Australian fund was up 2.3%, International up 1.3% and the tactical funds up between 0.3% and 0.9%. These returns were supported by a fall in the Australian dollar, which added significantly to performance in June. June was a strange month from a performance perspective. World
May continued to see positive returns across our portfolios, our Australian fund was up 2% and the rest were up around 1% over the month. These returns came as protectionist trade rows flared and markets belatedly realised that European growth is slowing more sharply than expected – themes that we were relatively well positioned for.
April saw markets bounce back from a poor March, and our portfolios had healthy gains with our international portfolio up 2.6% and both our Tactical Growth and Tactical Foundation funds rising 1.6%. International shares were aided again by a falling Australian dollar – over the last 3 months the weakness in the Australian dollar has
Financial planning has long had two major problems, and the intersection of the two problems is where the action is. The Royal Commission into banks is merely uncovering what most people in the industry have known for a long time. Problem 1: Do Financial Planners provide advice or sell product? If I go to a
Yesterday’s Royal Commission had all the elements for some great headlines: a celebrity taken down, a $500,000 stuff up, impersonating clients and fake degrees. But what I want to talk about is managed accounts. First, some context from Fairfax: High-flying celebrity financial planner Sam Henderson’s world came crashing down on Tuesday as the banking royal commission heard he instructed his employees
March was a shocker for the ASX with the ASX200 down over -4%. Investors in our tactical funds did much better, led by our income and accumulation funds increasing +0.4% and +0.3% respectively. International shares performed much better than Australian shares (helped by a falling Australian dollar) finishing down -1.1%. In particular, our March performance
There are so many issues coming out of the Royal Commission into banking that its hard to maintain the outrage. Here is yet another one that might have slipped through in the torrent of misdeeds: Hayne: “As beneficiary you can’t call for the asset which is held on trust for you? Is that right?” AMP: “Yes, that’s
David Harrington from IAG channels Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it”. From The Australian: Australia has 700 pieces of different regulation that need to be changed before driverless cars can take to the roads, according to Insurance Australia Group, which
There have been changes proposed by the Labor party to imputation credits. We have put together a quick series looking at a number of aspects for investors: In Part 1 (link) we looked at the winners and losers from the proposed changes In Part 2 we look at some peripheral issues (a) at how management
I have blogged a number of times about self-driving cars being the key to working out the path for oil prices and so it is important to work out if the recent pedestrian death by an Uber self-driving car is a sign that self-driving cars are further away than we expected. Electric Car Economics An
There have been changes proposed by the Labor party to imputation credits. We have put together a quick series looking at a number of aspects for investors: In Part 1 (link) we looked at the winners and losers from the proposed changes In Part 2 we look at some peripheral issues (a) at how management
The last few weeks have confirmed our view that most of the cash from Trump tax cuts will end up as dividends or buybacks. At the same time, we are awash with articles warning of the dangers of buybacks, from Vox to the FT to the Harvard Business Review. I’m hoping none of these arguments
Labor has proposed a number of changes to franking credits paid on dividends. The proposal absolutely has some merit behind it, as a system set up so that people weren’t taxed twice has evolved into a system where some people get taxed zero times. But the current implementation has significant issues and creates a lot
Our pitch to investors has been that by investing in a mix of quality and value stocks you can avoid a lot of market volatility. Our portfolios didn’t chase the market higher in January, and then made up ground in February with our direct international portfolio posting a 1.6% gain and our tactical portfolios all returning between
The main concern that I have with profit growth driven by tax cuts is that it doesn’t reflect true economic strength. So, while global earnings growth during reporting season looks impressive (Australia being the exception) I want to know what’s behind it: And margins: So, it is an interesting asset allocation decision: Markets are expensive, we
There is a battle going on in the financial press for the hearts and wallets of retail investors. On one side is research houses Morningstar and DALBAR who both regularly publish studies showing that retail investors underperform – DALBAR’s most recent report thinks retail investors do 3.5% worse per year than the market, Morningstar think
I had a few questions from investors about how the numbers from Reneweconomy earlier this week showing that batteries+solar are at grid parity in Adelaide stack up against our analysis. The short answer is that salesmanship is all about framing. The numbers are similar, with high electricity prices, relatively good solar resources in Adelaide and
Given the events of the last week, it feels like performance for January is largely irrelevant. The headline is that the US market is down 10%+ from its peak a few short weeks ago, punctuated by two ~4% down days. But, the headline doesn’t mention the rapid rise in January, or that for Australian investors
In June 2007, two relatively obscure Bear Stearns mortgage funds closed. With the benefit of hindsight, this was the start of a wave of mortgage defaults that heralded the start of the financial crisis. In October 1987, a stock market correction turned into a rout as a trading strategy called portfolio insurance saw markets accelerate
With markets in free fall over the past two days, the question for investors is what to do? Here is a quick list of things that I go through in market downturns: 1. Don’t panic – assess the situation rationally. Retail investors have a distinct tendency to buy when markets have risen and sell when
Some Coalition in-fighting on electric cars and a new electric “Black Cab” in London caught my eye overnight and given our investment interest in electric cars I thought it worth an update on the investment arithmetic. Electric Vehicle investment numbers Of more interest, given our view that electric cars are at the cross-over point for taxis
Good news: Stock selection continues to support performance with our international portfolio outperforming a falling world market. Bad news: Statistically, December was the worst month so far for our Tactical Portfolios. Perspective: A 3-day fall in global shares (priced in AUD) between Christmas and New Year was the only reason for the negative performance, and
Wall Street Journal on a theme dear to our hearts – Chinese growth slowing: The Business Cycle Is Different This Time—Thank China Diverging Chinese and U.S. growth are behind the confusion in global markets right now Commodities and stocks have started 2018 with a bang. U.S. oil is trading over $60 a barrel for the
There was an interesting Wall Street Journal article yesterday on mobile payments in China – I knew mobile payments were big in China (and that the US is a long way behind on cashless) but I hadn’t realised how stark the difference is: BEIJING—Soliciting handouts near a grocery store, Zhao Shenji, a slender man with
I wanted to follow up on Jeremy Grantham’s comments from yesterday and run through some of GMO’s asset allocation views from the perspective of an Australian investor. Jeremy Grantham & Co. at GMO have put out two thoughtful (as always) pieces in the last 3 weeks. I rate the team there highly and so when
The International Monetary Fund (IMF) put out a white paper Friday entitled “Credit Booms—Is China Different?” The answer? Not in any meaningful way. Here are some selective quotes and charts (the yellow notes are my comments – and apologies on the IMF’s behalf for the poor quality of their charts): Strong Chinese output growth after the
Via the FT, Deutsche has a big report out on inequality: And they think its only getting worse. No surprises there. This is one of our megatrends (see our primer for more details) that we see at the root of the lack of demand and the increases in debt. My take is that we are
