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30 June 2022
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We are witnessing a shift away from new, “exciting, visionary, ground-breaking companies” to well-established, quality businesses, with resilient cash flows, that make good profits and have solid growth prospects.
It was a joy ride while it lasted but the free money era could not last. The consequences of the misallocation of capital into poor companies is now playing out and shareholders face billions of dollars in losses.
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."
With 62% of Australians aged 65 and over relying at least partially on the age pension, are they better off owning their home or renting? There is an extra pension asset allowance for those not owning a home.
With 700 Australians retiring every day, retirement income solutions are more important than ever. Why do millions of retirees eligible for a more tax-efficient pension account hold money in accumulation?
A fund manager argues it is immoral to deny poor countries access to relatively cheap energy from fossil fuels. Wealthy countries must recognise the transition is a multi-decade challenge and continue to invest.
Equity investing comes with volatility that makes many retirees uncomfortable. A focus on income which is less volatile than share prices, and quality companies delivering robust earnings, offers more reassurance.
At around 10.30pm on Saturday night, Scott Morrison called Anthony Albanese to concede defeat in the 2022 election. As voting continued the next day, it became likely that Labor would reach the magic number of 76 seats to form a majority government.
Using the nine dimensions of well-being used by the OECD, and dividing Australians into Baby Boomers, Generation Xers or Millennials, it is surprisingly easy to identify the winners and losers for most dimensions.