Tremors cause tsunamis

Tremors cause tsunamis. The results season just past was a popularity contest the likes we have not witnessed since the halcyon days prior to the GFC... If history doesn't exactly repeat, the script is certainly reading in the same vein with greed, excess liquidity and over exuberance unsustainably inflating valuations. We have little doubt the bubble will burst with a sharp adjustment in the pricing of riskier assets with the small and micro end of the sharemarket likely to suffer more pronounced downturns than the larger companies. The many smaller companies that are trading on ultra-high multiples may seem safe but ultimately this faith is likely misplaced. The infallibility of their earnings forecasts likely more vulnerable to a general economic malaise than is currently contemplated - spreadsheets or the users of spreadsheets simply can't handle the non-linear. Whilst running with the herd can be reassuring in the good times, in the bad times the perception of safety can evaporate quite rapidly. Full report here: (VIEW LINK)

Established in 1961, Schroders in Australia is a wholly owned subsidiary of UK-listed Schroders plc. Based in Sydney, the business manages assets for institutional and wholesale clients across Australian equities, fixed income and multi-asset and...

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