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Saturday, 22 January 2022
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We tend to call any change a 'disruption', but the vast majority of so-called disruptive technologies are variations on a theme. Many innovations are really high-risk, low-probability investments.
Uber is the largest loss-making startup in history, and while investors will climb aboard the IPO and return money to early investors, the stockmarket will eventually realise there is no identifiable path to Uber profitability.
Exogenous factors like macro changes and weather can affect a company’s short-term profits. Management often blames uncontrollable factors for earnings downgrades but rarely owns up to a fortuitous tailwind.
Dividend streams tend to be stable and determined by fundamental factors. Unlike capital valuations, which are affected by estimates of prospective returns which are, in turn, strongly affected by market sentiment.
LICs can sustain their dividends not only from current year profits, but from reserves built up in prior years. This report looks at reserve levels as a sign of consistency of future dividends.
A 'Goldilocks economy' is one which runs neither too hot nor too cold. A combination of steady global growth, benign inflation and easy monetary conditions is carrying share markets to higher levels.
The surprising fact from this study of profitability is that there’s no such thing as a ‘bad’ industry, only inadequate or inappropriate management.
Not all business use their capital in the most productive way, and investors need to recognise when companies are struggling to generate cash flows to pay off debts when due.
There's more to a company's profitability than the headline dollar figure. Measures such as return on equity, return on assets and profit margin can provide a much better and balanced perspective.
Turnarounds are not easy. As Warren Buffett said: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact."
The wealth management businesses of major banks may be efficient uses of their capital, but it comes with scrutiny of the vertical integration model and culture risks. There's increasing focus on whether it's worth having.
The major banks and other large companies attract a lot of attention when they report profits of billions of dollars, but other measures of profitability show the big headline figures can be misleading.
Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.
Eligibility for the Commonwealth Seniors Health Card has no asset test and a relatively high income test. It's worth checking eligibility and the benefits of qualifying to save on the cost of medications.
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.
This is our annual checklist of what retirees need to be aware of in 2022. It is a long list of 25 items and not everything will apply to your situation. Run your eye over the benefits and entitlements.
The Warren Buffett/Charlie Munger partnership is the stuff of legends, but even Charlie admits it is coming to an end ("I'm nearly dead"). He is one of the few people in investing prepared to say what he thinks.
Depending on personal circumstances, it may be time to rethink the bias to paying down housing debt over wealth accumulation in super. Do the sums and ask these four questions to plan for your future.