Damien Klassen

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MB Fund December Portfolio Performance

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

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WSJ drinks MB’s kool-aid on China

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

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Mobile Payments – Open Thread

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

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Bracing for a near term melt-up

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

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IMF debunks “China is different” meme

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

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Deutsche: Inequality getting worse

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

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Stocks to short for your grandkids

Richard Bookstaber recently put out an interesting post on sectors that he thought had problems on a 30-40 year view.  Richard is the author of a number of good finance books – I liked A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation and I have his new one The End

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Earnings down on Trump tax cuts?

A few companies have come out recently talking about the effect of Trump tax cuts and flagging large losses/write-downs. From the FT:   in the short term, the cut in corporation tax to 21 per cent will lead to a revaluation of all BP’s US deferred tax assets and liabilities. On current estimates, the impact

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Tax cuts are wrapped, waiting on Trump to sign the card

Both branches have now approved the Trump tax cut bill, which is now just waiting on Trump’s signature. His signature didn’t come immediately, with the suggestion that Trump may be holding off to delay some of the spending cuts until 2019. My view continues to be that the tax cuts are a short-term sugar hit for the

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Sell the fact?

Buy the rumour, sell the fact is a well-worn truism.  The question is whether the Trump tax cuts will fall into this pattern (i.e. the stock market increases while the potential of tax cuts exist, only to fall once the legislation is actually passed) is a good one and there are many arguments for and

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Santa rally continues

With Trump looking increasingly likely to leave tax cuts under the Christmas tree for all the good boys and girls (i.e. anyone who is rich), and lumps of coal for anyone concerned about climate change, the US market powered on again overnight: The US dollar took a breather:   Oil was largely flat overnight, but two

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Another real estate insider taps out at the top

La Trobe Financial, which is an Australian lender specialising in non-conforming loans (i.e. if you are too risky for the big banks, you go to La Trobe) has decided that its time to cash in its chips (via the Financial Standard): Melbourne-based La Trobe Financial, one of the largest non-bank lenders in the country, struck

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MB Fund November performance (part 2)

One of our core investment themes is that international stocks are the best asset class for Australian investors at this point in the cycle. To date, this has been the right call, with our international portfolio increasing over 13% over the last 4 months on the back of a weak Australian dollar, favourable stock selection

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MB Fund November portfolio performance – Part 1

One of our core investment themes is that international stocks are the best asset class for Australian investors at this point in the cycle. To date, this has been the right call, with our international portfolio increasing over 13% over the last 4 months on the back of a weak Australian dollar, favourable stock selection

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The pros and cons of ethical investing

Ethical investing is frankly confusing. There are plenty of good products, but also a number of products whose promoters may not be as ethical as the stocks they invest in… For me, there are three key issues: What is the effect on investment performance How are the stocks chosen What are the fees Read on

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MB Fund October portfolio performance

One of our core investment themes is that international stocks are the best asset class for Australian investors at this point in the cycle. To date, this has been the right call, with our international portfolio increasing almost 10% over the last 3 months on the back of a weak Australian dollar, favourable stock selection

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MB Fund September portfolio performance

During September the mix of the falling Australian dollar and increasing international equities saw all of our portfolios again outperform their benchmarks except the income portfolio. The international portfolio was the standout, up 4% for the month. Our overweight to international equities in our Asset Allocation portfolios helped to offset weakness in Australian equities and

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Would you like a car with those fries?

Bloomberg ran a report last week on electric cars that turned into a longer read than I expected as I chased through some of their numbers that seemed wrong: It’s been 10 years since Apple Inc. unleashed a surge of innovation that upended the mobile phone industry. Electric cars, with a little help from ride-hailing and self-driving technology,

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MB Fund August performance

Apologies for the lateness of this report, we are still getting reporting systems ironed out with our portfolio provider – you will be hearing from us much earlier for the next monthly report. While some of the key trends that we are positioning the portfolio for moved against us last month (bonds and the Australian

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Asset allocation vs stock selection in portfolio returns

There was another entry into the academic statistical war that makes up the debate between whether asset allocation or stock selection is more important from ReSolve Asset Management recently. The full paper is technical, full of principle component analysis and the discussion of the appropriate correlations to use between markets (if that sort of thing appeals

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Coal still doomed

The new look US Department of Energy released a big report last week on the power industry. As a reminder this is the report commissioned by the new Secretary of Energy, Rick Perry, who seemed as if he had already written the conclusion that “coal was king” and was just looking for someone to come

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International shares are less volatile than Australian

Investing can be a volatile ride, the last few days have reminded us. The last few days have also reminded us why holding international equities is often beneficial for Australian investors – the Australian dollar acts as a shock absorber on returns when volatility hits, which is exactly the opposite effect that international investors get investing

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Money Laundering for Dummies

The bit I don’t get with the whole CBA money laundering through ATMs is why? The fees are so small. If you are going to launder money you need to: (1) take a hefty fee (10-15% should be an absolute minimum); and (2) obtain leverage over the criminal for future use. Macrobusiness has numerous times

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Where to invest internationally

Given: (1) a spike in the AUD to 80c vs the USD (2) an increase in the interest in our international fund and (3) that our tactical asset allocation portfolios remain heavily overweight international, I thought it worth expanding on our international equities portfolio and its exposures. It’s a tough time to be making investment

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Are electric vehicles cost-competitive?

The biggest risk to the thoughts I have presented on energy costs are the assumptions about the cost of batteries. Battery costs have been shrinking at 20% per annum for the last few years. If that cost improvement continues for the next 5-10 years then disruption for the energy sector will have arrived. If it

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Energy/Battery price update

Last week we got an update from the US EIA on the growing differential between electricity prices throughout the day – the spread is now out to $45/mWh between prices at 1pm and prices at 8pm: Source: EIA Given this, it is worth a quick update of where prices stand in our journey to energy

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Are oil stocks cheap?

Quick chart from the Wall Street Journal / BMI overnight asking the question: Are energy stocks undervalued?   The answer is no. No, they aren’t. And even if oil stocks were undervalued this is precisely the wrong valuation chart to look at. I’m not saying the Price to Book ratio shown above won’t rise –

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Robo-advice conflicts

Bloomberg ran a story this week about conflicts of interest in the robo-advice world with a few choice digs: Some of the big banks’ new algorithmic programs may favor funds from companies that pay the banks millions of dollars for access to their wealthy clients. … There’s a risk that the banks’ robo programs could