The Australian sharemarket is a highly concentrated one. As outlined in the Auscap November 2015 newsletter, just twelve stocks constitute approximately half of the market capitalisation of the ASX200 (Index). In fact, as at the time of publication, these stocks represent 48.7% of the Index, with a combined market capitalisation... Show More
Have low interest rates in the major developed world economies caused asset bubbles in the emerging economies around the globe? What might the consequences of this be? Can leverage ratios continue to increase to support growth? What will happen if interest rates rise? How should this affect our thinking about... Show More
In this edition we discuss Australian property and the price level of domestic residential real estate....In Australia, residential property is considered the safest of all assets. Residential property prices have not experienced a broad decline since 1991. Because property has not fallen for such a long time, the risks involved... Show More
The irony of risk is that when a risk is most obvious, most discussed and most feared, assets are normally being priced attractively to compensate for that risk. When risk is present but not feared, not apparent or not acknowledged, asset prices typically rise, which can lead to investors receiving... Show More
Investment risk is the probability or likelihood of loss in relation to a particular investment. In the last newsletter we discussed business risks as some of the most apparent investment risks when purchasing shares of a listed company. But there are plenty of investment risks that are not business risks.... Show More
Most seasoned investors agree that an understanding of risk is a critical part of the investment process. Some investors adopt an investment approach and then try to manage the risks associated with the investments they have made. For Auscap, risk frames our investment approach. Management of risk comes first, prospective... Show More
We have found that sharing a consensus opinion on the merits of an investment with the majority of the market is rarely a good way to generate strong returns. In fact, if the opinion is sufficiently consensus and positive, it normally guarantees that the return from the particular investment will... Show More
Investing in the stockmarket must be the perfectionist’s worst nightmare. There is often no clear right or wrong investment. There is never a value equation that can actually be solved. No matter what some might suggest, there is no specific price that accurately values a company, or at least not... Show More
In the boardrooms of corporate Australia and across the national press there has been a great debate unfolding. The suggestion is that payout ratios, or the amount of corporate income that is paid to shareholders in the form of dividends, are too high nationally. Apparently many companies are sacrificing future... Show More
In the middle of the biggest decline in Australia’s terms of trade in decades, the unemployment rate has actually dropped from 6.2% a year ago to 5.8% in January 2016. What’s more, the participation rate has been holding steady at around 65.2%, slightly above the 65.1% average of the last... Show More
2016 has started with significant volatility in global equity markets. The Australian market has not been spared, with the ASX200 Index falling 5.48% in January and continuing this declines into early February. In the 11 months ending 31 January 2016, the index was down 15.6% from its monthly closing high... Show More
It would appear that 2016 has commenced with the ugly, and unfortunately a quick analysis of the state of the Australian economy suggests that, perhaps like the stockmarket, the year ahead holds plenty of challenges. While these challenges are likely to limit growth, we hope that they will offer us... Show More
Should investors be focused on timing the market? Historically, many successful investors have been quoted as saying that they do not try to time their investments and this has led to the common belief that it is time in the markets that is crucial to success. While we agree that... Show More
It often feels less risky to be invested in the most widely held stocks… but is this actually the case? By their very nature, these well owned companies are well known, very large and typically well-capitalised businesses. Their size and familiarity offer comfort to the investor and somewhere along the... Show More
Where’s the market headed from here? It’s a common question asked, and we are not convinced that anyone will successfully tell you where it will be tomorrow, let alone weeks or months into the future. However it does beg the question – if predicting the direction of the market is... Show More
Group think is dangerous. At the major turning points in markets the majority view is often an incorrect one. Both WTI and Brent crude prices have declined dramatically in the last few months despite the near consensus view that they should rally. The common view that oil should shortly trade... Show More
What makes Warren Buffett truly remarkable is the fact that he is almost unarguably the greatest financial communicator and educator the world has seen. Auscap attended the 50th AGM of Berkshire Hathaway in May this year and our latest newsletter highlights a few of the insights we gleaned. The commentary... Show More
Is it a time to be alert but perhaps not alarmed? We are frequently asked whether or not we consider the share market to be expensive. In our opinion, equities continue to look reasonably priced in absolute terms and attractive relative to alternative asset classes. This is reflected in an... Show More
Is the power of anchoring influencing your investment decision making? Anchoring in finance terms refers to basing investment decisions on previous known facts or stock prices, even if they're not relevant to assessing value. It is incredibly difficult to avoid and can be hazardous. Presented with a constant stream of... Show More
What is the opportunity cost of risk-seeking behaviour? In Auscap's February 2015 newsletter, we explore our perception of a common attitude towards risk - that in a person's life cycle they should be more tolerant of risk when youthful to try and achieve higher returns because one can ride through... Show More
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