Chart Of The Week: Equity Risk Premiums

Callum Thomas

This week the "Chart of the Week" shows the equity risk premium across a couple of key developed economy stockmarkets. The equity risk premium provides a unique perspective on valuation, which brings in not just what's going on with absolute valuations, but also reflects the opportunity cost or trade-off vs... Show More

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Running to Stand Still

Etienne Alexiou

On the 9th March 1987 U2 released the Joshua Tree, the fastest selling British Album of all time that went on to sell over 25 million copies. Joshua Tree is still acclaimed as one of the greatest albums of all time. Interestingly Bono considered pulling the album prior to its... Show More

He’s going the distance, he’s going for speed

Brett Gillespie

Have you ever pushed the limit? Sure you have, just that little bit further, just that little bit faster. It’s the secret to success. But also sometimes disaster… Perhaps nowhere is breaking that limit as obvious as on a race track. Yet how many of us, as amateurs, love to... Show More

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Why Rate Rises Will Crush All Asset Prices

Christopher Joye

In my AFR column I explain how we faded the recent equities shock picking up $159m of cheap assets but why in the longer-term equities and property are likely to be subject to more serious corrections as higher wages growth and inflation inevitably become the dominant investment dynamic, forcing discount... Show More

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Right into the danger zone...

Brett Gillespie

It was February 4th, 1994, and I was on a plane to LA from Sydney. I was treating myself to 4-week holiday skiing in Aspen and then on to New York; 1993 had been a good year. Initially when my boss, Richard Farleigh, had resigned 10 months earlier I wasn’t... Show More

UBS: Now is not the time to reduce exposure

Alex Cowie

Mark Haefele, the Global Chief Investment Officer at UBS penned a short note on the US market’s drastic pullback, calling for calm and suggesting it is not time to reduce exposure, not unless rates or inflation keep rising. Here’s his comment in full: Show More

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Resource stocks haven't run their race yet

Naheed Rahman

Over the past quarter, much of the small-cap index outperformance over large caps has been due to the excellent returns of small resource companies. Given their cyclical nature, is that a reason to look elsewhere? The following note makes it clear that we think not. Show More

The sky is not falling, but storm clouds are brewing

Jason Teh

The sky is not falling was the message in September 2017. Our message was that the overall market did not show excessive valuations, which generally is a precursor to stock market corrections. However, our market outlook dimmed due to recent ‘risk-on’ rally, where most of the year’s return was delivered... Show More

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Contagion Risk in Big Bond Bubble

Christopher Joye

As we roll into another new year, in the AFR I ask: "Is the fixed-rate government bond market – to be distinguished from floating-rate securities – in the mother-of-all bubbles? Very likely. Has it burst? Maybe, although the evidence is not persuasive. As it normalises, will it cause mayhem in... Show More

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Just how did BHP get it so wrong?

Sam Dyson

Mining 101: a good mining company makes money at the low end of a steep cost-curve. This is BHP’s strategy and it is working wonders in iron ore. However, in 2011 BHP forgot this simple rule. Deal hungry and with cash flow burning a hole in the pocket after two... Show More

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High Returns, Low Volatility – What Could Possibly Go Wrong?

Jonathan Rochford

Economic news was strong in October, led by US Q3 GDP coming at an annualised rate of 3.0%. Quarterly earnings and sales for S&P 500 companies are beating estimates by more than usual. One standout was bellwether stock Caterpillar, which after four years of declining revenue has seen sales up... Show More

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Q4 Investment Outlook: Braver for longer…

Fidelity International

How long can the good times roll? The second-longest yet arguably most-hated bull market in post-war history just grinds on and on, while investors get more worried by the day. Valuations in some areas are certainly becoming stretched, but overall they remain some way off the peaks seen in 2000.... Show More

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Telstra's Trump moment

Daniel Mueller

Prior to Telstra's FY17 result, media articles abounded speculating the company was going to announce the securitisation of its recurring NBN payments. The media cited various analyst reports that a securitisation of up to $18 billion was about to create a capital management bonanza for shareholders. Show More

Which is a better investment: Property or shares?

Roger Montgomery

In this wire, Andreas Lundberg Senior Analyst at Montgomery Investment Management, tackles the question of how an investment property would measure up if analysed using an equity analysis framework: Show More

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So you've sold Telstra... Now what?

Robert Swift

Remember the Tech Media Telecom (TMT) bubble of the late 1990s? Australia didn’t participate because of an absence of such companies on the ASX, but elsewhere it produced a frenzy of deals and some ludicrous valuations which mostly came unstuck. Although it eventually got out of hand with crazy valuations,... Show More

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Stockmarket Euphoriameter rises to a new post-crisis high

Callum Thomas

The Euphoriameter rose again in July, with the combined sentiment reading for the S&P500 lifted by higher forward PE ratios, a falling VIX, and rising levels of bullish sentiment in the surveys. The chart will probably trigger memories or comparisons to the 1990's because aside from the surge coming out... Show More

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Institutional investors are capitulating

Callum Thomas

The latest State Street Investor Confidence Index data for July showed a distinct sense of upside capitulation. The headline global index was up 7.9 points to 108.9 - this was driven purely by North American institutional investors with the North Am index up 10pts to 112.1 which offset declines in... Show More

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The stockmarket season is changing

Callum Thomas

Following on from the popular post on the seasonal turning point for the VIX last week, here's an insight into seasonality for the S&P500. The chart shows 2017 superimposed on the historical average price movement across the year, and it looks like a fairly decent fit, with the implication being... Show More

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Once safe Australian fixed-rate bonds suffer losses

Christopher Joye

Australia's main fixed-income index — against which almost all superannuation funds benchmark — delivered its fourth worst return in modern history over the 12 months to June 30. In particular, the exclusively "fixed-rate" (rather than "floating-rate") AusBond Composite Index returned just 0.25 per cent over the last year before you... Show More

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The end of QE: What it means for markets and investors

David Sokulsky

In the aftermath of the Global Financial Crisis (GFC), the traditional method of lowering interest rates failed to promote meaningful growth or inflation. This prompted several major central banks, including the US Federal Reserve (Fed), to undertake ‘extraordinary’ monetary policy measures to stimulate their economies. The effect of such an... Show More

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