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11 December 2024
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The magnitude and duration of society's most important trends are often underestimated. While these trends are usually touted as a tailwind, one in particular could have dark consequences for many assets.
Listed infrastructure companies often have fabulous assets, with monopoly positions and extremely reliable cash flows. But how do you identify the very best companies, and how do you pick them up at a reasonable price?
ASX market bulls point to corporate balance sheets and earnings, while bears highlight company valuations and persistently higher inflation. It's best to ignore short-term noise and focus on investing in quality companies.
From virtual assistants and transportation to eCommerce and even healthcare, AI is continuing to expand its application. As investors, understanding the risks and opportunities associated with this new technology is vitally important.
Charter Hall has rising margins, decreasing capital requirements, proven earnings growth, and business quality. 2024 earnings guidance is conservative, yet the company trades at a large discount to the ASX 200.
ASX blue-chip ResMed has been hammered due to concerns that new obesity drugs will reduce demand for its product. What are these drugs, how effective are they and what impact could they have on the sleep apnoea market?
Trillions need to be spent upgrading grids, transmission distribution and charging infrastructure. Electric utilities are a low-risk way to play this multi-decade growth theme to energy transition.
Everyone appears negative on the outlook for consumer discretionary spending and that's been reflected in the share prices of ASX-listed retailers. The chance to buy quality retailers at cheap prices has arrived.
A reader asked for ideas on investing in the energy transition, which this article argues is the defining investment thematic of our lives. However, it warns to look for companies not only participating but winning.
Following an overseas trip to see facilities and meet management and competitors, a fund manager has strengthened her conviction on three key stocks. Some companies can prosper in an economic slowdown.
The majority of Listed Investment Companies trade at a discount to the value of their underlying assets, which may be good for buyers but annoying for sellers. Managers struggle to remove the discount, as explained on ASX:MGF.
A collection of interviews with financial markets experts on investing, superannuation, retirement and other topical issues, as published by Firstlinks over 2021 and 2022.
History will show Europe was ill-advised to rely on Russian fossil fuels, and the energy crisis has delivered stark choices on climate change, government finances, inequality, inflation, politics and social cohesion.
Not long ago, globalisation seemed on a relentless growth path, promising to bring everyone into a global economy. But with politics, pandemics and the Ukraine war, 'geoeconomics’ will lower living standards for all.
Surveillance capitalism refers to the collection and use of consumer data to further profits. Will a renewed focus on privacy change the online-ad business model, or is it too entrenched?
To add to the world's problems, high inflation is exposing Europe's frailties and poorer nations have no independent monetary policies to help their economies. Core problems cannot always be kicked down the road.
The US Federal Reserve's first foray into quantitative tightening from 2017 fizzled. Can asset-selling – aka money destroying – help fight inflation this time around?
Last week, I interviewed Hamish Douglass about investing and positions in his portfolio. He was articulate, confident and relaxed, but a few days later, the Board of Magellan announced he was taking medical leave.
In theory, unlisted infrastructure should be priced at discounts to listed assets due to their illiquidity. In fact, the opposite has been the case, but both types are positioned to withstand the inflation threat.
Governments and investors have been complacent about the build up of debt, but at some level, a ceiling exists. Are we near yet? Trouble is brewing, especially in the eurozone and emerging countries.
Markets don't seem normal, but Magellan is criticised for its caution. Higher interest rates to control inflation could create a recession and some of today's investing will turn out a mass delusion of modern history.
The focus is on Magellan for its investment performance and departure of the CEO, but Douglass says the pandemic, inflation, rising rates and Middle East tensions have not played out. Vindication is always long term.
Hundreds of green hydrogen projects show this energy opportunity is finally being taken seriously. While a cost disadvantage and technical challenges need to be overcome, it promises to deliver a path to net zero.
Sir Frank shares his story, including his journey from war-torn Europe, identifying opportunities, key character traits necessary for business success, and the importance of remaining paranoid yet optimistic.
It's a major threat as trauma proliferates because the malware-based crime known as ransomware is reaching menacing proportions. Cracking down on cryptocurrencies might spoil the risk-reward for criminals.
Focus on what you're good at. If you have no insights on macro themes or market trends but can spot a great company, that should be your emphasis, while carefully watching entry and exit prices.
The case for strong stock markets is convincing. The problem is that the case for a major correction (20% or more) in the next 12 months is also convincing. And why Bitcoin is absurd and defies logic in a market bubble.
Our next article on modern retirement income products looks at Magellan's FuturePay. It aims to provide predictable income without having to sell down capital, but at its heart, it's an equity fund with added support.
The gradual switch to electric vehicles is underway, but given the obvious shortcomings of fossil fuels, there are a surprising number of problems electric cars need to overcome. EVs have not yet won the race.
China is approaching a 'Lewis turning point' at the same time it faces a demographic time bomb with its rapidly-ageing 1.4 billion population. How it solves these problems will have a massive impact on Australia.
US growth forecasts for 2021 are as high as 8%, so is the massive stimulus a superfluous ‘sugar hit’ amid shrinking spare capacity? High government debt points to taxes and reduced benefits, with inflation risks.
Germany benefits from the European currency union that makes the country an export dynamo, but there are at least five reasons why it is reluctant to force the economic and fiscal union the continent really needs.
Microchips are the key battleground in the rivalry between Beijing and Washington because the integrated circuit ranks with the internal combustion engine and electricity as inventions of consequence for everyday life.
On the sidelines of the Morningstar Conference, the Magellan co-founder reflects on the pandemic and which sectors are set to gain and lose. He says we were lucky the pandemic hit when it did (videos and transcripts).
No option removes the existential threats to the UK stirred by its EU departure. What started in 2016 as enough voters defying the odds has left the UK dangling politically and economically amid a pandemic.
Questions on the stock market/economy disconnect, how to focus long term, technology's growing role, income in a low-rate world, Modern Monetary Theory and endless debt and the tooth fairy.
Ultra low interest rates could be counterproductive for economic growth. Policymakers need to rely less on monetary stimulus and be mindful of the side effects they are creating, especially for retirees and savers.
The latest iteration of globalisation is forming. Western consumers will face reduced choice and higher prices and global production networks will be less efficient. But the US and China also need each other.
It's tempting to focus on the negatives of the pandemic, the US election, the China/US cold war and inequality. But technology is delivering benefits that even wealthy people in the past could not have imagined.
It’s not only products and business models that create wealth. Management teams make decisions on how to deploy capital and such actions drive vastly different outcomes over time.
The growth in wealth and aspirations of middle-class Chinese may become a 'consumer of last resort' for the world economy, but to earn that status, China must avoid a ‘trap’ among other challenges.
Population decline is a new, yet largely ignored, trend with underrated economic and social costs. Much of the growth that drives economies, especially in Australia, comes from population increases.
The restaurant business has always operated on thin margins, and home delivery doesn't make it better. But most of the delivery platforms are also struggling, and an industry shake-up is underway.
The deteriorating mood will bring changes that will have profound economic, financial, social and political changes that can be grouped into new, accelerated, busted and possible trends.
As Australia prepares to relax Covid-19 lockdown restrictions, crucial questions of lives versus livelihoods are being asked. At its most pointed, it's also a matter of lives versus lives.
Italy is so weak economically, financially and politically that it poses an existential threat to the eurozone. Solutions to appease the crisis face political hurdles and a euro exit is possible.
Three Morningstar resources are available to Firstlinks readers to assist in the current market turmoil. A short Hamish Douglass interview, detailed US research into the virus and a special trial offer.
Quantum computers have a theoretical ability to calculate millions of possibilities in seconds, yet it may take time before we see a breakthrough in the practical applications of sub-atomic computing.
Prolonging a recovery with stimulus could lead to a worse slump later. Even today, policymakers are haunted by actions taken in 1937 which led to a loss of production and jobs and a falling GDP.
Netflix once claimed its creation of 'binge watching' made sleep its major competitor. Now, the coming blow will be the loss of one platform that offers just about everything subscribers want.
What once seemed like science fiction is being created by the world’s highest-quality businesses such as Alphabet, Amazon and Microsoft. The best investment outcomes are achieved by buying the best companies.
Central bank independence was an appropriate solution when inflation was a threat. In today’s low-inflation, low-growth and high-debt world, even central banks doubt their level of influence.
The companies that earn a place in an investment portfolio are like the players in a sporting team. They must perform strongly and complement each other, and not keep someone out who is better.
Exclusive: Hamish Douglass’s 13 lessons from years of investing include how to find the right investments, how to let investments work for you, risk management and the best temperament.
At the 2019 Morningstar Investment Conference, Tim Murphy sat down with Hamish Douglass to discuss how Magellan was transformed from a new business during the GFC to managing $83 billion now.
Artificial Intelligence is developing faster than the ethical issues is raises, as most people seem unconcerned about the impact of data trails and decision-making by algorithms. The response in time is likely to be more regulation.
Despite some challenges, not all companies that are consumer-focussed face difficult times. Some are well-positioned, and the market has sold them off to relatively low valuation multiples.
5G technology has amazing potential to step-change our lives with lower costs and higher speeds, but security and political concerns could delay, distort and add costs to its deployment.
Fintechs want to inject themselves between banks and their customers in the most profitable areas. Most will fail but others will chip away and the banks must respond, while the regulators keep a close watch.
Stocks are vulnerable if interest rates rise much faster than expected on inflation concerns. What is the probability of this heightened risk and what are the consequences for portfolios?
If you're still getting your head around blockchain, read this quick summary on the potential of distributed ledgers. The technology is not without problems but cannot be ignored.
Market risks are skewed to the downside for the next 12 to 18 months, and if the Federal Reserve is forced to counter inflation, a 30% broad-based correction in equity markets is a possibility.
Consumers are now having a bigger impact on China’s economic growth to the benefit of multinationals, but foreign companies can face boycotts when pursuing Chinese consumers.
The political ramifications of classifying robots as 'electronic persons' and the loss of jobs might nullify automation’s economic benefits for society.
Global stock markets could face the most volatile period since 2008-09. The danger is that US fiscal stimulus could fan inflation and lead to higher-than-expected interest rates. Risks are asymmetric to the downside.
Listed infrastructure is a large universe of more than 350 companies worth more than US$4 trillion at prevailing market prices. This way of entering the asset class offers several advantages over the unlisted alternative.
The old paradigm that manufacturing will increasingly transfer to low-cost developing countries is being turned on its head by technology advances.
Pressure is mounting on the leading digital platforms to better police inappropriate content before the regulators disrupt the disruptors. There's still time to put their own houses in order.
The claims that the leading tech companies are expensive overlooks the sustainable and growing earnings, plus they have new developments which have only scratched the surface.
In Part 2 of this two-part series, Hamish discusses how the most dominant businesses of the last 50 years might struggle, faced with new threats, and even Warren Buffett and Charlie Munger are worried.
Facebook, Google and Amazon seem already entrenched in our lives, but with the information they know about their users, their ability to target advertising and products has only touched the surface of change.
Business has always faced changes, but the rapid extent of technical progress means many companies will cease to exist over the next 20 years, including some famous global brands.
The growing world of cybercrime and its increasing sophistication is putting the worth of the internet at stake, requiring governments world-wide to give greater priority to cybersecurity.
Knowing about psychological barriers to good investment performance can help to understand and minimise mistakes. Consider how often a cognitive bias has led to a poor investment.
There's a common misconception that as a 'bond proxy', infrastructure asset prices will fall as bond prices do when rates rise. But these hard assets have sufficient inflation protection to drive a more robust outcome.
It's a home-grown Australian success story, managing far more for foreign institutions than local, but it took a long time to gain traction while laying the foundations for the massive inflows that were to come.
A fund manager's biggest challenge in the current economic environment is how to best serve the interests of investors knowing that a severe market disruption is a possibility.
Maybe this time, investing IS different, as technology approaches tipping points of exponential advancement. Developments in genomics, robotics, artificial intelligence and computing power may go in unforeseen directions.
It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.
Berkshire Hathaway’s third quarter earnings update reveals Buffett is selling stocks and building record cash reserves. Here’s a look at his track record in calling market tops and whether you should follow his lead and dial down risk.
As we get older, many of us start to think about how we’ll be remembered by those left behind. This looks at why that may not be the best strategy to ensure that you live life well and leave loved ones in good stead.
Australia's bloated government sector is every bit as responsible for our economic worries as the cost of living crisis. Grand schemes like the 'Future Made in Australia' only look set to make it worse.
A new report shows Australian fund managers performed better in the first half of the year, with most outperforming indices in local equities, small and mid-caps, and bonds. Their results are less impressive over longer periods.
SMSF trustees are required to value all fund assets, including property, at market value when preparing the fund's financial statements each year. Here are some key tips to ensure that you get it right.