Pricing growth: Why simple doesn't work
In the twelve months to Monday of this week, the S&P500 index is up 15.02%, while Alibaba is up 80%, Google is up 29.3%, Amazon is up 71% and Apple is up 24%. By contrast, Exxon is down 5.6%, Coke is up 7.6% and General Motors is up 11%. To... Show More
Byton – the US$1.1b electric car start-up
This is happening - just not in America. A syndicate of Chinese investors has raised US$240m in first round funding for a US$1.1b car factory in Nanjing, China, and is launching a US$45k, 500 kilometre-range electric, autonomous vehicle for mass production in 2019 (in China) and 2020 (in the US... Show More
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The beginners guide to machine learning
“The last 10 years have been about building a world that is mobile-first. In the next 10 years, we will shift to a world that is artificial intelligence (AI) first.” - Sundar Pichai, Chief Executive Officer, Alphabet (Google) Show More
China takes the BAT to FANG
Just a few days ago, Alibaba Group, the Chinese on-line retailer, came within 1% of being the world’s most valuable retailer – with a market capitalisation of U$473b, its value was just US$4b lower than that of Amazon. Alibaba has been on a tear this year – it is up... Show More
The trouble with index investing
The Name of the Rose is Umberto Eco’s masterpiece whodunit set in a 14th century monastery (bags of sex and grisly violence with some serious semiotics thrown in). The last line of the book, which is a reference to the title, has been translated from the Italian as "Yesterday's rose... Show More
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Netflix share price falls 12% as competition increases
Strike one for Netflix was the news that Disney will no longer supply programming from the end of 2019. Strike two happened late last week when several credible sources reported than Apple had committed to spending US$1b on original programming in 2018. Show More
Tesla raises US$1.5b senior debt, Musk flags slowdown on equity issues
The news that Tesla will raise $1.5b in senior debt signals a new phase for the company – one in which equity issues are likely to be thin on the ground, if at all. On Tesla's second-quarter earnings call with analysts, Musk telegraphed as much: "There may be some wisdom... Show More
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Uber: The network effect, in reverse
Do not expect Uber to right itself now that CEO Travis Kalanick has “resigned.” The company’s problems run far deeper, and the story has far from played out. Show More
Why value investing isn’t what it used to be
Now is the time to be extremely wary of value investments. The unprecedented change we are living through means that the risks of value investing have never been higher. Show More
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The problem for Coles and Woolies
Amazon on Friday announced the US $14b acquisition of Wholefoods in the US, which has correctly been understood by the Australian market as a reason for the share prices of Coles and Woolworths to fall – just like competitors Walmart and Walgreen did in the US. Show More
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Crunch time for Australian bank investors
Fund managers are closing shop (Altair), calling the top (Kelly) and selling out (Hunter Hall). In the five months since January 1, the Australian market has picked up just 2%, compared with over 8% for a US market still hyped up on the Trump trade. Most of the damage has... Show More
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We need to talk about Snapchat
What next for Snapchat? After a disastrous earnings call, the stock fell 25% and came within 25c of breaching its issue price of US$17. Those that didn’t take the opportunity, brief though it was, to sell at US$24 might be feeling nervous. It is hovering around US$20 now, following the... Show More
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Data: the new oil. Here are the companies with the biggest wells
The Economist this week makes reference to data as the new oil – the fuel on which the new economy runs. Last week, we made observations about knowledge networks, with commentary on how central they had become to business, and by way of proof, noted the change in make-up of... Show More
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Amazon arrives in Australia
Amazon in the past 24 hours has confirmed it will launch a full-scale retail offering in Australia – it is now calling for local retailers to join its global marketplace as part of the launch, having already briefed CB Richard Ellis for warehouse space earlier this year. Show More
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Amazon, Hugh Hefner and what it means for Coles and Woolies
Could a television show about Hugh Hefner, the Playboy founder, form part of a competitive threat to Australian retailers Coles and Woolworths? Show More
The bull case for Tesla
Tesla blew through car production expectations this quarter – overnight it released production figures showing it had made just over 25,000 vehicles by 31 March – putting it on track to make 500,000 cars by 2018, according to the major shareholder, Elon Musk. The stock price is up 28% since... Show More
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PSD2 – the slow burn on bank valuations
Not really discussed in all the coverage on fintech in Australia is the impact of the Revised Payment Service Directive (PSD2) in the UK and Europe, forcing banks there to open their platforms to non-bank service providers from next year. Show More
Why the technology eats jobs argument is wrong
Adrian Turner nailed it yesterday at the AFR Summit, saying that 40 per cent of Australia's jobs will disappear in 10 years. "The fourth industrial revolution is under way and the winners will be so far ahead of the losers, Australia has no choice but to pivot to the new... Show More
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Global portfolios: Investing by looking backwards
GICS classifications (energy, auto, retail) are the way most fund managers construct portfolios. This isn't good. Companies that disrupt individual sectors rarely come from within the sector itself. Google and Facebook are not in a media index, but they are clearly media companies. Show More
The second stage of disruption
If you were to look quickly, the ups and downs of reporting season would suggest that things are pretty much the same, or even slightly better. Show More
Whether etf or active, the better option is to choose the product which provides the higher risk adjusted performance, net of fees.
David. Thanks, but that is not the issue. The question is at what weight? The index isn't forward looking, and this is the problem - there is no set-and-forget for value capture, as my colleague Anshu Sharma explained here on Livewire: https://www.livewiremarkets.com/wires/amazon-google-report-tomorrow-here-s-why-they-keep-getting-bigger
Henry, Michael... comments noted. Please note that gross profit margins exclude R&D, as they do for all car companies, under GAAP accounting.
On Tesla raises US$1.5b senior debt, Musk flags slowdown on equity issues -
David: Maybe. But Google revenue was up over 20% in the most recent quarter. How should we price this? And what other companies are growing like this? If I could find them, we would buy them...
great piece steve
Actually, Graeme, its a great question. The Reserve Bank will continue to be the lender of last resort, i am sure, but this is question of how profitable the banks should be, not how secure - which is why the political climate is important. As well, regulators having been stepping away from heavy handed controls in recent years, for example of Visa and Mastercard, on the basis that they were not systemically all that important in terms of total overall banking system. I would expect a similar reaction to any new payment providers too.
William - Tesla sees what a comparable car sells for, and sells accordingly - under the umbrella price, as it were. At scale, given fewer parts, it can always be more competitive than a comparable older technology ICE car Of course, any start-up, which is what Tesla is, has to overcome the high fixed costs involved, and Tesla is no different. But the company's rising share price means its easy to attract new investors (so hardly desperate, given Tencent etc) Ted - quite right Henry, $25b+ in sales is hardly Kool-Aid
