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
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