Marcus Padley

In December last year, I wrote an article entitled “Nothing Terribly Wrong” talking about the market fears being overdone. At the time the ASX 200 was down 12% from the top. In hindsight, a marvellous thing, I wrote it ten days before the market bottomed. The markets have bounced. Let... Show More

Marcus Padley

The newly appointed deputy chair of the Australian Prudential Regulation Authority (APRA) talking at a FINSIA conference last month said that APRA’s “stability measures” - in other words their restrictions on bank lending introduced last year - have helped prepare the Australian economy for “an unseasonable cold snap”. Really? Show More

Marcus Padley

In the last couple of months it has been all about “the market”. We have been more concerned with cash levels than stock selection and as one of my team said yesterday, you know something is wrong when the first word anyone says when they walk into the office is... Show More

Marcus Padley

I run a fund. The recent 13.2% fall in the ASX 200 has caused us all to do some hard thinking. You have to decide, is this the start of a long bear market, or is it an opportunity? Whilst clearly talking my own book as a fund manager, I... Show More

Marcus Padley

A lot of trading books and courses will tell you in the first paragraph “Treat it as a business” and whilst that’s boring, it’s right. And one of my tennis partners has another trading cliché, “Do not trust yourself”, which is really the same thing. The more investment, and the... Show More

Marcus Padley

We are significantly cashing up in the Marcus Today portfolios today. We are doing it for a number of reasons. Managing money is about stock selection and timing. But just sometimes you have to look up from the stocks and respect what the "Wood" is doing not the trees. This... Show More

Marcus Padley

In March this year Bill Shorten pledged that should Labor win the upcoming election they will axe cash refunds for excess imputation credits paid to individuals and in superannuation funds. This would reverse the cash refund of imputation credits introduced by John Howard two decades ago. It would also be... Show More

Marcus Padley

This is a daily chart of the S&P 500 index which shows that it is now higher than the record high in February and is very close to being overbought once again, a rare occurrence for such a large index. As you can see, using a bit of amateur charting,... Show More

Marcus Padley

We are into the results season and these days, for equity investors, the results month is like being on a battlefield during an artillery barrage wearing fluoro orange. You never quite know when you’re going to get blown up. Show More

Marcus Padley

Here’s something to send to your kids. It appears to be irritating to younger investors that seemingly less gifted people than themselves fluked 40 golden years of extraordinary property and stockmarket appreciation. Golden years that, since the global financial crisis, are by no means guaranteed to repeat. The younger generation... Show More

Marcus Padley

The ANZ, NAB, WBC and Macquarie report results next week and will go ex-dividend shortly after. The sector is on its back, and for a variety of reason, one of which is collecting as much franking as possible before Bill Shorten buggers it all up. Then this looks like as... Show More

Marcus Padley

For individual investors, one of the biggest challenges is uncovering new investment ideas. While fund managers have brokers and investment banks regularly knocking on their doors trying to sell their latest deals, other investors must be more creative. Here are 11 sources of stock ideas for the private investor. Show More

Marcus Padley

I have never liked the expression “Smart money.” It is demeaning to individual investors and used by commentators to imply they are smart and the rest of you aren’t. But a lot of supposedly smart professionals do some very dumb things, and a lot of non-professional investors, often our clients,... Show More

Marcus Padley

Some long-term Marcus Today followers will remember the story about a Member who used to work in a Collins Class submarine on weapons systems (computer whizz). When they surfaced he would download stock-market data. When they submerged he would spend many hours of idle time back testing numbers looking for... Show More

Marcus Padley

I keep a track of what some of the better fund managers are doing. It is all part of my "Flow Analysis" highlighted in this article. Below is a table from the AFR on 25/1/2018 listing the best and worst performing fund managers last year. One way to track what... Show More

Marcus Padley

A2M is up 9% in two days helped by the BAL earnings upgrade. It has also announced it will expand its brand throughout the North East of the US starting this month. The area is home to 60 million consumers which according to research from A2M accounts for 20% of... Show More

Marcus Padley

There is Fundamental analysis and there is Technical analysis. A lot of investors think it ends there. But there is another body of analysis that is essential to the process which is not so obvious, analysis that any fund manager in the small and mid-cap space must master and respect. Show More

Marcus Padley

There was an article on the Livewire website this week quoting a recent Kerr Neilson presentation, the billionaire fund manager at Platinum Asset Management. There were lots of good takeaways but the comment that interested me was this quote: Show More

A reply to the zero returns contention: Even with the dividends the real return from the stock market is significantly lower than an index would suggest. Lets say the long term return on the All Ords is around 6% plus dividends of 4% - that makes a generous 10% - take off a conservative inflation rate of 4% over the long term (its higher) - then you are working on 6% compound - go through a financial planner (1% - used to be 2% - and even if you don't use a financial planner you will still have your own costs of time spent managing your investments). Then you or they buy managed funds (1.5% - used to be 2%) - now you are playing with a 3.5% real return. Then pay any of the following - a spread on buying managed funds, commission on trades, the index fudge (survivorship) that eat into the 3.5% and you are getting close to a zero sum game. Compounding is the eighth wonder of the world - but not if you don''t compound, retirees don't, they spend it. If you are entitled to but lose the cash refund of franking credits then things get even worse. All the averages you hear quoted are from product selling institutions using an index that doesn't have management costs, dealing costs, that perfectly compounds dividends, that perfectly gets rid of and acquires the index constituents as they change, that has no employees, offices, water-coolers or heating bills. All this renders an index return an utter fantasy, which is why most fund managers underperform after real costs - not because they are useless as the marketing of zero-value add passive funds projects. Hopefully you begin to understand how you have to do better than invest in the average in the long term. The 'fantastic' (fantasy) returns on indices over-inflate reality which is why they are used ad nauseam to sell financial products. They are trying to give you the impression there is a party going on and it is easy to take advantage off it by buying their products. But the real return will be significantly less than the headline index return. If you are a passive investor then OK, but do not believe the 9.1%, understand that the next ten years will deliver ten completely unrelated returns each year and the average is a statistic not an expectation, and cut your costs to the bone or you'll go nowhere. For the rest of us we will get on with picking better quality stocks, avoiding rubbish stocks and timing the market. If an adviser or a fund manager doesn't bother to do that they are an administrator only, and should be paid accordingly. Meanwhile there are some fantastic engaged individuals in the advice and funds management industry that live and die on their performance, love what they do and succeed at it. I'd prefer to invest in them than some benign index that relies on a lie to sell itself. Just saying...

On Padley: The problem with "buy and hold" -

To Lorraine, Bob, and David - You're right, my bad (was quoting a news article) - the original speech is on this link from Chris Bowen - https://www.chrisbowen.net/media-releases/a-fairer-tax-system-dividend-imputation-reform/ - it says “The policy will apply from 1 July 2019, which means it will only affect future earnings and franked dividends that start flowing in following financial year.” – I don’t know if that timetable has been extended or qualified since. Someone needs to ring Bill!

On What to do about franking credits -

Rising rates is in the price - and for those who didn't live through the 1990s, 17% is a high interest rate, not 3.5% by the end of 2019 (!) - interest rates are going nowhere significant - if they did it would matter, but they aren't likely to.

On The Collins Class Rule -

James - I should have put up the small caps relative to the ASX 200 against the VIX - it would make the point better - small caps outperform on a relative basis when the market is more 'comfortable' . The small caps are flying relative to the market now - as Morgan Stanley point out...their PE relative to the large caps is a a premium only seen three times since 2000. Arguments aside - I've just take some (premature?) small cap profits because when this turns...no-one is going to be able to get out. Finger on trigger.

On Small Caps Flying -