Damien Klassen

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Disruptive technology and investment

Here is an interesting table from Technology Foresight showing the most disruptive technologies and a timeline for when they are expected. I have shown the most imminent ones below, click the image below for the full table as a pdf: I’m interested in your thoughts (preferably with supporting research or at least some sort of reason to

39

Golden Rules for Tax Efficient Investing

Fairfax has been running a series of articles (see here and here) on the collapse of Great Southern and the hardships it has caused, a timely reminder of the perils of mixing debt, investment and tax breaks. Almost every case consists of investors borrowing to invest on the advice of a “trusted professional”, large amounts

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Property insiders expect the correction to continue

From the AFR: The owners of Australia’s $117 billion listed real estate sector are expecting the market to ‘correct’ and have kept their gearing to historically low ranges in anticipation of this according to feedback received by S&P Global Ratings. At event in Sydney on Tuesday where the impact of tighter credit on property prices was discussed,

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US earnings still powering ahead

A frequent focus point for the media is whether a company “beat” its earnings forecasts or not. But the definition of a beat or miss is poorly constructed, and often misleading. For me, changes in forward estimates are a more reliable indicator of whether a reporting season is progressing well or not. On that basis,

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R&D changes: Policy short-termism at its best

Front page of the AFR today: Sorry – no R&D grants because we need the money so that we can give tax cuts to companies so that they can spend more on R&D (disclaimer: more R&D will only occur if there is enough cash is left after paying higher dividends, performing more buybacks and awarding managers bigger

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Did Macquarie just leap from the “glass cliff”?

Correlation doesn’t equal causation. But sometimes it does. I would like to know whether the board of Macquarie are Freakonomics listeners or just unwitting participants in a glass cliff experiment – Australian edition. The ABC sets the scene (emphasis mine): Shemara Wikramanayake is set to become the first female chief executive of Macquarie Group, taking over from Nicholas Moore,

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Why you should get your money out of Little China

Vested interests are everywhere, chipping away at the moral fibre of politicians, tilting taxes in their favour and diverting resources. In a more diversified economy, the vested interests compete with each other for government favours – a waste of money I’m sure, but there is some benefit in that no one type of vested interest

9

What does ethical investing cost?

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

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US Q2 earnings set to boom

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

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Battery power tipping point approaching fast

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

3

MB Fund June Performance

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

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MB Fund May Performance

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.

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MB Fund April Performance

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

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The four big fixes for better financial planning

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

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10 lessons from the RC’s financial advice slaughter

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

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March MB Fund Performance

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

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IAG: Driverless cars 20 years away

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

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Is dividend imputation distorting Australian capital?

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

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Has Uber self-driving crashed?

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

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International shares and tax

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

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The problem with buybacks

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

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Winners and losers from franking credit changes

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

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MB Fund February Performance

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

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US prints profit season pearler

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

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Why do retail investors lose?

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

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Update on battery pricing

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

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MB Fund January Performance

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

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Is short vol the pebble that triggers an avalanche?

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

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What to do in a market meltdown

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