Damien Klassen

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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

14

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

2

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

12

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

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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.

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How high can the house price boom go?

In the last three years, Australian houses have gone from boom to bust and now back to boom again. I have written in the past about how crazy the property cycle is, and recently, a buying frenzy has pushed prices back toward previous highs. Many are calling the market up 10% over the next year,

5

Official launch of free Property Calculator

A few weeks ago we posted this Property Calculator here for you all to test; we appreciated the feedback, much of which has been implemented We’re pleased to announce the official launch of our Australian Property Calculator. Read on for a brief breakdown of some of the features Calculator features: Your property forecast Step 1:

21

Understanding coronavirus statistics

The data quality showing the spread of the coronavirus is poor. The data from the Hubei province (the origin of the virus) is still wildly different from the data from elsewhere and so we need to analyse the data in separate parts. While the numbers don’t look as bad when analysed this way, I note

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How to invest during a pandemic

There is a certain seductiveness to a bearish investment argument. The chance to appear like a rational actor in a crazy world. The opportunity to be able to say “I told you so” at a future date. The moral superiority of the cautious investor. The problem is stock markets usually go up. The world belongs

36

Property tragics, see if you can break this

Hi all. We are looking for beta testers for a property calculator that compares investing in property to investing in shares or renting. The calculator is at https://nucleuswealth.com/property-calculator Let us know in the comments where you think we have gone wrong… Below is a post that will accompany the calculator once tested. Deep in the Australian

10

MB Fund smashes it in 2019

2019 was a banner year for investment returns. Our own funds performed well throughout the year, highlighted by our growth fund up 17.8%*. This puts it in the top 4 growth superannuation funds according to researcher Chant West: Other Nucleus funds also had significant gains, our International direct share portfolio led with 27.2% returns over

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MB Fund November Performance: International boom!

November was a stark reminder of the power of narrative in driving returns. World stock markets rose almost 5%, but earnings broadly were downgraded. Our portfolios handily beat all benchmarks over the quarter as our exposure to international stocks offset our large cash holdings. We have been trying to keep enough exposure to international stocks

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Infographic: Electric vehicles will not save coal

The purpose of this Infographic is to debunk the common misconception that a switch to Electric Vehicles will hugely increase demand for electricity. This Infographic breaks down and depicts the data that it won’t, and in turn, Electric Vehicles will not save Coal as many suggest is might. The resulting effect is that Oil has

10

GDP heat map

Every quarter I like to look at the changes in Australian GDP and which categories are responsible for the growth / decline. Each bubble represents a category of GDP proportionate to its size, colours represent the growth rate. Click the charts for a large version and commentary:  This quarter the key takeaways include: Federal Government

13

Private sector investment is as dead as the Dodo

There is an investing narrative that suggests with three interest rate cuts in the past few months, companies are about to unleash a capex spending spree. I’m skeptical. Yesterday’s capex data, which surveys both past and future company capital expenditure, supports my skepticism. I need to preface all of this with the observation (raised before)

0

MB Fund October performance

October saw investment returns for equity markets higher yet again, the bigger story was a reversal in the bond market. Our tactical investment funds have performed better than most superannuation and investment funds over the year. In October the funds gave back some of the lead we have built up. Outperformance in our international fund

1

The problem with traditional ethical funds

Ethical investment inflows have doubled in 2019. But, the Wall Street Journal highlights a problem near to my heart: ethical investing is not the same to everyone. Funds with a focus on socially responsible investing are enjoying a record year of inflows. But many such portfolios aren’t as clean as investors might expect. Eight of

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How to create a $47bn WeWork in one easy step

This is a message for those who want to avoid being ripped off by aspire to be investment bankers. One dirty secret (of many) in investment banking is valuations are an advertising tool. If you can’t manipulate valuations to get the number your boss wants you to get, you are in the wrong game. How else can

3

MB Fund September 2019 Performance

September saw volatile, but ultimately strong equity markets push the investment returns for most superannuation funds higher. Our tactical investment funds performed well, and continue to post-investment returns above the returns of most Australian super funds over the last year. This comes despite their defensive stance. In our portfolios, we are positioned for adverse outcomes,

4

Why the banks are still a big, fat sell

Treasurer Josh Frydenberg announced Monday an ACCC investigation into the banks not passing on interest rate cuts. I think the investigation will make a nice addition to ACCC’s bookshelf. They can file it next Rudd’s FuelWatch and Grocery Code of Conduct. The biggest question is whether the investigation is designed to be a distraction from

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Is it just me or are China’s reactions increasingly unhinged?

Part of my investment thesis on China is that the underlying structural issues have been laid bare by the trade war. Regardless of any face-saving deal, the problems will not go away. China’s reactions to three events in the past week appear increasingly unhinged and are likely to accelerate the process. Background China entered the

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MB Fund August Performance

Most superannuation funds lost money in August on the back of the Australian stock market, falling around 2%. Our tactical funds all bucked the trend to increase in August on the back of our overweight bonds  and heavily underweight Australian stocks holdings: In our portfolios, we are positioned for adverse outcomes, which means that we

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The great property yield trap

With decent investment yields increasingly hard to find, it is important to avoid yield traps when looking for alternatives to increasingly expensive bonds.  Looking beyond the headline yield is critical to avoid the pitfalls: sustainability of yield, adjusting for capital expenditure, incorporating buybacks and analysing cyclicality of earnings can all help. MSCI came out with a

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Manipulated valuations: WeWork vs your Superannuation

WeWork put its Initial Public Offering on ice this week as the company realised it would not be valued at the $47 billion that WeWork wanted. Indications are that WeWork would struggle to raise money with a $15 billion valuation. The process WeWork took to get a $47 billion valuation is instructive for anyone with

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First US, then Russia, to ravage Australian LNG

Some welcome news for LNG producers as the spike in the oil price flows through to the gas price for many Australian producers due to contracts struck over a decade ago. However, it is a short term gain only, the LNG market is highly competitive and only going to get more competitive going forward –