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Saturday, 18 September 2021
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COVID was a paradigm shift for thematic ETFs, satisfying investor sentiment toward disruptive trends and sustainable investing while covering almost any theme investors desire. Where do they sit in a portfolio?
There are few opportunities to buy tech heavyweights at attractive prices. In Morningstar’s view, four global leaders are trading at decent discounts to their fair values, indicating potential for upside.
There are pockets of bubble pricing in some assets that can pop at any time, but overall, valuations are frothy but prices of most companies can be sustained if not hit by rising bond rates.
FANMAG returns have been strong but not relative to their predecessors. Looking at a broader group of large tech companies, most have lagged the market. Fad-based investing is no substitute for broad diversification.
Investors with heavy allocations to a broad US index should check how much is exposed to tech stocks, especially when valuations look a bit steep. It might be time to reallocate to other sectors or styles.
The connectivity enabled by the ‘super platforms’ of Facebook, Google, Amazon, Apple, Microsoft, Tencent and Alibaba is creating the best investment opportunities as business catches on.
Checking global stocks with higher prices than the FANGAM stocks but weaker margins and growth identified almost 100 companies. Astonishingly, the ‘Heady Hundred’ are valued at over US$3 trillion.
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.
At a time when value investing is under attack, a reminder that Benjamin Graham heavily influenced Warren Buffett and Charlie Munger, and they have built his ideas into broad investing strategies.
Investors underestimate the power of network effects, which increase the lifetime value of users and deliver high incremental margins with fixed operating costs. It's worth trawling the market for strong network effects.
It is better for management and regulatory bodies to work together to preserve the innovative engines of Facebook and Google, not impose painful government intervention.
How does a small company fund manager identify customer loyalty, pricing power and network effects in a niche business trading at a high valuation, especially when so much value is in the future.
Who knew? With some surprise results, the Government is on unexpected firm ground in asking people to draw on all their assets in retirement, although the comments show what feisty and informed readers we have.
It's a remarkable statistic. In any year since 1875, if you had invested in the Australian stock index, turned away and come back eight years later, your average return would be 120% with no negative periods.
Never stand between Australian households and an uncapped government programme with $3 billion in ‘free money’ to build or renovate their homes. But excess supply is coming with an absence of net migration.
Picking macro trends is difficult. What may seem logical and compelling one minute may completely change a few months later. There are better rewards from focussing on identifying the best companies at good prices.
The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?
Some high-quality companies have emerged even stronger since the onset of COVID and are well placed for outperformance. We call these the ‘COVID Opportunists’ as they are now dominating their specific sectors.