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Thursday, 13 August 2020
Recently trending After 30 years of investing, I prefer to skip this partyAustralian house prices: Part 2, the bigger picture How to handle the riskiest company results in historyAustralian house prices: Part 1, how worried should we be?Welcome to Firstlinks Edition 369
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Many Share Purchase Plans leave large gains on the table for institutions, but some companies are handling them more equitably. As a shareholder, check if your company receives a pass or a fail.
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.
Just how drastic is that 200-point fall in US markets overnight? Data from the last 35 years shows it takes a big swing for the Australian sharemarket to predictably follow a US lead.
The 20% share price gains over the past 12 months have not been supported by similar improvements in company earnings. The market is willing to pay far more for each $1 of profit or dividends.
As the newly-inked initial trade deal between the US and China appears set to roll back some tariffs, we look at how these China-exposed Australian companies have fared recently.
The returns from Australian shares come from four main components. Any forecast needs to consider these different parts, as Australian shares were recent laggards in diversified portfolios.
Global central banks are delivering a sugar hit that markets are relying on, but it is unsustainable. Interest rates cannot continue to be cut into negative territory forever.
Peter Fitzsimons calls franking 'ridiculous' and Dick Smith calls it 'outrageous', but Dick Smith probably receives a significant refund because his Australian share investments are held in a very large SMSF.
Stock buybacks improve earnings per share, making it look like better company performance. In the US, if buybacks stop for any reason, both management and investors alike will have to shift earnings per share expectations downwards.
Labor's proposal on franking credits is not only facing considerable opposition, but it is also encouraging people to consider future ways to utilise the credits. It is a chance to think deeper about estate planning.
The National Seniors Australia (NSA) survey reveals that retirees want access to regular and stable income, even at the expense of lower returns. The need to preserve capital reduces tolerance of losses.
The Australian market again delivered strong returns in 2017-2018 with big sector differences, but there were large variations in global performance depending on the currency hedging strategy.
Eventually, prices become so extreme they bear no relationship to reality, and a bubble forms. I believe we are there today, not for all stocks but for many in the technology space.
There is good reason to believe the negatives will continue to outweigh the positives over the next 12 to 18 months. There is more concern about house prices than the short-term indicators suggest.
It is better to miss a results bounce and buy after the company has delivered than it is to step on a landmine. With such uncertainty, avoid FOMO by following these result season investing tips.
Three key indicators are useful for predicting the short-term outlook for house prices, although tighter lockdowns make the outlook gloomier. There is enough doubt to create cause for concern.
Imagine you had perfect foresight about COVID-19 at the start of the year. You correctly foresaw that the global pandemic would kill over 700,000 among 20 million infections by August. In Australia, borders would close, cities would be locked down, most mortgagors would be on income support and companies would be allowed to trade while insolvent. You then had to guess how much the stock market would fall. Would you say about 10%?
Sometimes the simplest ideas are the best. The founders of Afterpay stumbled on the attraction for consumers of paying by instalments, and now retailers must offer the facility or lose business.