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Wednesday, 15 July 2020
Recently trending 11 lessons from my lousy $50K profit on AfterpayWhich companies will do well in the turmoil of 2020?Why are we convinced 'this time it's different'?Howard Marks' anatomy of an unexpected rallyWelcome to Firstlinks Edition 363
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For investors able to react quickly when stressed selling hits hybrids, excellent margins are available on quality names. The GFC taught experienced investors lessons that are now repeating.
The margins (or spreads) on so-called AT1 bank hybrids have reduced significantly since the franking doubt was removed in the election, and investors should ask whether they are now rewarded for the risks.
The Coalition victory in the Federal election removed many policies which were overhanging the property market, and a relaxation of bank lending conditions is underpinning the signs of recovery.
Amid the many strategies proposed to overcome Labor's franking policy if adopted, often overlooked is building a portfolio of the right types of bonds and hybrids as an alternative source of income.
Changes to banking regulations have led to higher interest rates on bank loans for SMEs and personal loans, pushing borrowers towards the rapidly growing new segment of non-bank lending for faster and better service.
Hybrids are no more ridiculous than shares for retail investors, especially bank and insurance company issues. The increase in common equity in banks has improved the quality, but investors must be paid for the risk.
Afterpay listed at $1 in 2016 and traded recently at $70. How should an investor treat a small holding in a 70-bagger when each new level defies the experts? Should true believers let the profits run?
Compared with most years in the last decade, FY20 performed poorly due to the virus, and now dividends are falling. There are three things to watch this year as support policies are wound back.
While the shutting of Australia’s borders to international travellers and quarantine measures is damaging to certain sectors of the economy, it is not uniformly negative for all companies.
Data science is increasingly embedded into the research process of investment teams with the resources to exploit new technologies. The way the data is integrated and interpreted is crucial.
As the world gradually emerges from the aftermath of COVID-19, many are questioning if now is value’s time to shine? How can value stocks deliver outperformance in today’s environment?
Do you think investors can only lose heavily on bonds if the credit defaults? When bondholders accept 0.88% for 100 years, there is great potential for serious pain somewhere along the journey.
Even when the virus is finally contained, the business landscape will look very different. A critical issue is the ability of consumers to find product substitutes. Many people like what they find.
The strictness of screening processes can vary between ethical ETFs, and many rely on indices without additional oversight. This can result in stock inclusions that may not pass the ethical ‘smell test’.