Damien Klassen


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


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


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


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


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


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


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


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,


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


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


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


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


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


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


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


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


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 –


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


How do the rich get richer quicker?

There are a few studies that show that the richer you are the better your investment returns – Thomas Piketty the French economist is probably the most well-known author in this space. A recent Vox article digs into these returns using detailed Swedish data and essentially finds the same thing. The top 5-10% of households


Death to the Death Tax!

The front page of the Australian is highlighting that the Labor party is starting to make inequality an issue for the next election, and Leith ran a post yesterday about the Labor party and a possible inheritance tax for next year. I find the whole inheritance tax debate fascinating. In my experience Australian’s have 3


Why property is such a compelling investment in an SMSF

There is sometimes confusion about the returns available on property in a self-managed super fund (SMSF) – especially as the mathematics starts to get confusing with relative rates of return, real vs nominal and opportunity cost vs risk, before tax and after tax returns. But I have a much easier way to explain why it


Why does the MB Fund own some banks and miners?

I’ve had a number of discussions with investors over the last few weeks about investing in the Macrobusiness fund versus “do it yourself” investing and thought it worth aggregating the discussions into a post. Part of what I want to do with the MacroBusiness fund is to de-mystify portfolio investing. Many parts of investing are


Buy or sell the Syrian missile strikes?

The US missile strikes in Syria today create a considerable investment issue. On the bullish side, US intervention in Syria to help stop the descent into a failed state could stem the flow of refugee from Syria and potentially save hundreds of thousands of lives. Stemming the flow of refugees (the UN estimates there are


Are machines taking over the stock market?

There have been a bunch of articles out in the last week about the rise of the machines driving fund managers out of business. The headline is way more exciting that the details though. The detail is that computers are making fund managers more efficient. From the NYT Score one for the machines. The largest


Buy or sell the US dip?

No market goes up in a straight line, and so the US stock market was due a pull back at some stage. The question that you have to ask at this point is whether this is a typical market retreat following a 4 month almost straight line rise or is it something more sinister? The


When will electric cars disrupt oil?

Yesterday we had a long look at solar and battery power and how they affect the electricity sector. Today we extend the battery analysis to the oil sector and look at electric cars. “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Mark


Special report: Where to invest to win the energy race

Fossil fuels have a limited time as viable sources of energy. And I’m not talking about saving the planet or carbon taxes, simply economics. Coal, gas, oil, all have economics based on a “scarcity curve” – the more we use them, the deeper we need to dig to find more and more expensive they become


Want to buy the bigotry ETF?

A new ETF from Inspire in the US is trying to show that bigotry knows no bounds (hat tip to the FT): The methodology removes from the investment universe the securities of any company that has any degree of participation in activities that do not align with biblical values, which are: abortion; gambling; alcohol; pornography;