Equities
Roger Montgomery

Each day brings more news of another huge technology IPO, often by businesses that have never made a profit – and perhaps never will. But there are new signs that this latest tech bubble could be coming to an end. For some time now we have been warning that the line... Show More

Equities
Roger Montgomery

Appen (ASX:APX) is one of Australia’s high-flying tech stocks – which collectively go under the WAAAX acronym. Its share price has almost tripled over the past year as many investors ride the Oz tech story. But to my mind, the company’s valuation looks extremely stretched.According to its own description, Appen... Show More

Macro
Roger Montgomery

The Reserve Bank of Australia opted to leave interest rates on hold. But with key parts of the economy in decline, it may be just a matter of time before it has to cut again. The question is: how effective will a rate cut be? It’s generally folly to predict whether... Show More

Equities
Roger Montgomery

Uber’s upcoming IPO promises to be monumental. The big question for would-be buyers is: will this loss-making juggernaut be a good investment? Or, like its rival, Lyft, will its shares plummet after the float?Uber is the epochal poster-child amid an avalanche of celebrated loss-making, multibillion-dollar, start-ups that have used software... Show More

Equities
Roger Montgomery

Investors should be aware that another tech boom appears to be underway. Exuberant valuations, zero profits and knowledgeable private equity owners lining up to sell their stakes are painting a cautious picture for technology stocks. This time the boom surrounds the conga line of technology unicorns that have filed to... Show More

Buy Hold Sell

As the market comes to terms with what is increasingly looking like an odds-on Labor election win in May, pundits and investors are assessing how some dramatic policy shifts, including the scrapping of excess franking credits as well as changes to capital gains tax discounts and negative gearing, are going... Show More

Thanks James, the combined valuation of the two listings for Uber and Lyft at IPO was >US$100bn (Uber $82bn, Lyft $24bn), a higher valuation than every company on the ASX aside from the mighty BHP.

On Will a tech IPO bust drag the market down? -

The new information/evidence indeed is the massive lift in Auction clearance rates experienced in Sydney and Melbourne last weekend. It's now quite possible that a combination of rate cuts and loosening of APRA restrictions on credit availability could mitigate any downturn. The low for property may have been seen. Only a wave of forced sellers - if the RBA/APRA response isn’t effective at reversing the construction slowdown - would keep pressure on prices.

On Does it really matter if the RBA cuts again? -

Hi James, thanks for your comment. Yes, I think you are missing something. I assert it because Uber have the most to lose from switching. They already generate billions of revenue in rides with drivers who would strike and protest at any sign of change that disenfranchises them. They would lose billions of revenue as drivers switch en-masse to rivals and the fleet of robots taxis would be very small. Uber would be decimated. Note the recent driver strikes in LA. Moreover, fully autonomous vehicles in scale is a future whose horizon has just shifted a lot further down the road. Keep in mind autonomous vehicles were originally pitched to governments on safety grounds. But now, 80% of the lifesaving benefits of autonomous technology are available in driver assistance systems such as autonomous braking, lane holding and distant polio systems. That means it’s no longer a safety issue that the government needs to consider but a massive cost issue only.

On Will Uber’s IPO lead to uber losses for investors? -

Hi John, Amazon wasn't making any profit when it listed. It was loss-making at the time.

On The Unicorn has arrived -

Dan, electric vehicles "everywhere"? Often our dreams of an electric future fail to recognise the reality of billions of combustion engine cars still on the road for many decades. Think through each case for a car purchase; from farmers to those who can only afford a cheaper second hand car there will be many that will own combustion engine vehicles for a long long time. Unless government compels people to own electric, the cheaper second-hand values of conventional vehicles will also delay the transition to a fully electric national fleet of cars.  It will be decades and decades before all cars on the road are electric.

On Buckle up as car sales experience a bumpy ride -

Hi Albert, amid a belt tightening version of Deleveraging (which I believe I am first to call for Australia) people also delay/defer/discount repairs unless they are compulsory.

On Buckle up as car sales experience a bumpy ride -

Thanks for sharing.  I am not sure I agree with the conclusion of what the impacts will be on the market make-up from the proposed NG changes by Labor. Given NG will still be available to property investors in new or off-the-plan purchases, there are other dynamics at play.

On 5 charts that show housing could fall further -

Thanks for your comment Shaishav. The peak in interest only was June quarter 2015. APRA’s changes followed David Murray’s financial system inquiry in 2014. The changes shown in the table are between 2017 and 2018.

On 5 charts that show housing could fall further -

Hi Paul, my apologies for the delayed response. ARQ, since 2014 have invested a lot more than they have generated with a consequent increase in debt and equity raising. ROE is not impressive however the price has pulled back towards something closer to ‘value’.

On Previewing Reporting Season -

Yes Carlos we do have an Active ETF. My paper was not about active ETF strategies, it was as Chris tried to point out about passive market cap index investing.

On Active ETFs and Vegemite -

Hi Carlos, I was referring to the concern for property investors who will come off 5-year interest-only (IO) loans, and couldn't refinance again on IO, would potentially be forced on to unaffordable Principal & Interest loan terms in 2019 and 2020, this might cause them to sell the investment property. Hope that clears that up. All the best

On 7 questions with Roger Montgomery -

Hi Parth, I think you will find many of the fintechs will fizzle. Something or one thing will eventually break through to disrupt the majors but most will fizzle out and picking the winner and when is almost impossible.

On The Great Australian Dream Damaged? -

It is true that the best businesses are those that have a competitive advantage and the most valuable competitive advantage is the ability to charge a higher price and cause people to still cross the road to buy that product. Consumer brands are often used as examples of this and A2 milk has achieved the ability selling what is basically milk. The question has always been about the price of the stock and the barriers to entry. If you believe that the company can continue to grow in the future, as fast as it has in the past, then the price might in fact be cheap. If however you believe that normal market and competitive forces will produce more modest earnings growth than the price is implying, the stock is expensive. By definition (we don’t own the stock), we believe the latter.

On Make market corrections your ally -

Thank you for sharing your view. Different views are precisely what makes a market, and indeed, we could be wrong.  You are quite right when you point out that if your scenario transpires, the P/E would not be 40 times. Thank you again for providing the counter view.

On CSL: What the market missed -

Hi Carlo, you make a very good point. I too have been seeing flyers most weeks at a lower price. Price wars aren't great either (for the customer yes!)

On Hold the phone... How are the Telcos? -

Hi Glenn, we wrote our thoughts on our site about VTG. Even though the weighting of VTG in our funds was relatively minor, we are nevertheless enormously disappointed.

On Hold the phone... How are the Telcos? -