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
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
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
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
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
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
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
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
Markets move in cycles. The last 40 years have seen interest rates down from 20% to less than 1%, quietly fuelling a rise in bond returns over the same time. This has driven the return of the benchmark 60/40 portfolio (60% stocks and 40% government bonds). Over the 40 years, the benefit of the 60/40
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
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
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
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
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
Australian energy policy is a mess. Investors should ignore the arguments. The antagonists are stuck in a perpetual time shift, prosecuting cases from 5-10 years ago, ignorant of the incoming change in solar economics. 5 years ago coal and gas were the cheapest sources of energy in a majority of countries. Now wind and solar
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
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
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
Diversity issues have exploded into the global zeitgeist over the past few months as Black Lives Matter protests have rocked cities around the world. From an investment perspective, diversity is an interesting concept. There have been a lot of studies into the diversity of gender and race on company performance with, well, diverse results. The
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 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
See our Coronavirus data Dashboard for individual country data. COVID-19 statistics and cases around the World We think there is some effect from seasons, but poor or delayed responses swamp any benefit. In wealthier southern hemisphere countries, like Australia and New Zealand, the cold weather does not appear to have had an impact on
There is a decent argument that stock markets have condensed an entire three-year cycle into three months. While there are other factors at play, robotic trading is accelerating both the speed and magnitude of stock market movements. I’m not expecting robots to go away, and how investors look at the market will need to adapt.
Stock markets have dislocated from fundamentals. The economic fundamentals are almost as bad as they have ever been. Stock market valuations are almost as expensive as they have ever been. But that hasn’t concerned markets for the past six weeks and, to be frank, it doesn’t look like concerning markets any time soon. This is
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
What’s our medium to long-term outlook on Australian banks? We are not positive on Australian banks in the medium term. Australian banks will have a time to shine again. That time is not while staring down the barrel of the highest unemployment rate seen since the Great Depression and an extended period of close to
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
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
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
