An inflection point for Aussie shares

The Rules of Investing

Livewire Markets

In recent months, much has been said on growth versus value, and tech stocks versus cyclical stocks. But focusing on these labels misses the true underlying driver of these trends:  duration. 

But what exactly is duration? A ‘long duration’ asset simply means one where a large portion of the returns are expected to happen in the distant future. These stocks are highly sensitive to changes in long-term interest rates, and they've taken a pounding so far in 2021.

“Very small moves in interest rates can have outsized impacts on valuations. Our concern is that a steepening yield curve could cause these businesses to be repriced quite quickly,” explains David Moberley from Paradice Investment Management.

Long-term interest rates are on the rise, and according to some experts, this trend is likely to stick around. With many of the ASX's winners in recent years firmly from the 'long duration' category, and many of the underperformers in the 'short duration' category, this could be an inflection point for Australian equities.

In this episode of The Rules of Investing podcast, we discuss how his experience at a start-up helped him as an analyst, why Australian gas stocks are well placed for further appreciation, and we hear why CSL's collection problems are likely to just be transitory.

Time stamps:

  • 1:50 - David’s history in a tech start-up and the applicable lessons to his job today
  • 4:50 – Buy the rumour, sell the fact
  • 8:05 - The drivers behind the success of commodities
  • 13:06 – Santos thesis: good company management versus long-run outlook for fossil fuels
  • 17:00 – The short selling landscape today
  • 19:36 – Rationale behind a suppressed exposure to tech and how to keep an eye on opportunity
  • 25:01 – Is CSL offering value at today’s prices?
  • 32:45 – David answers our three favourite questions.

Discussed in the show:

David's recommended reading for new investors:

  • The Intelligent Investor - Benjamin Graham. Available on Amazon or Booktopia.
  • One up on Wall Street - Peter Lynch. Available on Amazon or Booktopia.
  • Common Stocks and Uncommon Profits - Philip Fisher. Available on Amazon or Booktopia.
  • The Most Important Thing - Howard Marks. Available on Amazon or Booktopia.
  • Margin of Safety - Seth Klarman. No longer in print.

Clients and performance come first

The Paradice difference comes down to accountability, alignment, experience and performance. Click the ‘contact’ button below to get in touch.

This material has been prepared by Paradice Investment Management Pty Ltd (ABN 64 090 148 619, AFSL No. 224158) (“Paradice”). This material (or any contribution to it) is not intended to constitute advertising or advice (including legal, tax or investment advice or security recommendation) of any kind. It is of a general nature only and was current only at the time of initial publication. It has been prepared or provided on the understanding that Paradice is not providing professional advice on a particular matter. The information and opinions contained herein are not necessarily all-inclusive and, as such, no representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained herein and no responsibility arising for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Paradice, its officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. This material may contain certain forward looking statements, opinions and projections that are based on the assumptions and judgments of Paradice with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Paradice. Because of the significant uncertainties inherent in these assumptions and judgments, you should not place undue reliance on these forward looking statements, nor should you regard the inclusion of these statements as a representation by Paradice that the strategy objectives will be achieved. For the avoidance of doubt, any such forward looking statements, opinions, assumptions and/or judgments made by Paradice may not prove to be accurate or correct. Before relying on the material or making any decision in relation to the funds, you should consider your needs and objectives, consult with a licensed financial adviser and obtain a copy of the relevant product disclosure statement, which is available by visiting Past performance is not a reliable indicator of future performance. The value of an investment in the funds may rise or fall. Returns are not guaranteed by any person. These materials may not be copied, reproduced, published, disclosed or redistributed in any format without the prior written consent of Paradice. Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

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The Rules of Investing is one of Australia's top investing podcasts. We interview the leading investment minds from Australia and overseas to better understand their processes and philosophy. After launching in October 2017, there have been over...

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