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Markets have found some calm after experiencing their worst sell-off in two years, which was caused by the unwinding of the carry trade. Comments by Fed officials have eased US recession worries, while Japanese shares posted their best day since 2008. Meanwhile, Australian shares are expected to dip after the RBA ruled out an imminent rate cut, with their hawkish commentary on inflation leading to a rise in the Australian dollar. The content in this podcast is prepared, approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814. The information does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information before acting and if necessary, seek appropriate professional advice.See omnystudio.com/listener for privacy information.
Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news equity markets are under severe pressure today, in 'extreme fear' mode. And that is despite the current economic activity signals being relatively sanguine.First in the US, the widely watched ISM service sector PMI bounced back to expansion in July with a better reading than was expected. The new order component expanded. The companion S&P/Markit services PMI told a similar story featuring rising output.The US Fed's Loan Officers Survey for July noted that while credit standards were little-changed for consumers, demand was weaker especially for real estate loans. For businesses, banks tightened credit standards overall but demand for loans was holding positive and little-changed. This survey is not picking up any special sign of credit stress, for either borrowers or banks.The Caixin services PMI suggests the Chinese service sector picked up the pace of its tepid expansion, coming in better than expected and better than the official measure.In Japan it was the same. Japan's service economy returned to growth during July, following the slight dip recorded in June. Gains in both total activity and new business were solid amid improved customer numbers and demand conditionsIn India, business confidence rose in their services sector and it maintained its rapid expansion. But inflation pressures from this high demand are now showing through and a warning flag that they may not be able to keep up the pace.And in other big economies, like Brazil, their service sectors are also expanding at a positive clip. There are others like this, but you get the picture.But in Australia, their services sector is easing back, no longer expanding. New order levels fell. And of course it will be a sharp contraction in New Zealand when we get the July services PMIs.Later this afternoon the RBA will release the results of its monetary policy meeting today. A rate hike, talked about until recently, seems to be off the table now. A cut also seems unlikely as well. In fact markets aren't actually pricing in a rate cut there until November. That is in contrast to New Zealand where a full -25 bps cut is priced in for next week's RBNZ MPS - and another three cuts by the end of this year. That is a sharp repricing by markets in just one day.The UST 10yr yield is now at just on 3.77% and down -2 bps from yesterday. Wall Street has started its week with the S&P500 down -3.2%. Overnight European markets were down about -1.8%, bookended by London's -2.0% drop and Paris' -1.4% fall. Yesterday Tokyo fell and amazing -12.4%. Hong Kong was down -1.5%, Shanghai down the same but Singapore fell -4.1%. The ASX200 fell its own very sharp -3.7% and its worst day since the pandemic, but the NZX50 got away relatively lightly with 'only' a -1.5% retreat in Monday trade.We do need to remember it is 'silly season' in most markets with relatively light summer trading. Changes get magnified when volumes are light and many people are 'at the beach'. However, the sharp rise in fear has drawn in unusually heavy trading volumes now.The price of gold will start today down -US$39 from yesterday at US$2404/oz.Oil prices are -US$1 lower at just over US$72.50/bbl in the US while the international Brent price is just under US$76.50/bbl.The Kiwi dollar starts today down -10 bps from this time yesterday at just on 59.3 USc. Against the Aussie we are down -20 bps at 91.3 AUc. Against the euro we are down -80 bps at 54.2 euro cents. That all means our TWI-5 starts today at 68 and down -60 bps. A sharply rising Yen had influence on this too.The bitcoin price starts today at US$54,584 and down another extreme -6.2% from where we left it yesterday. That is a -US$3,600 drop in a day. Volatility over the past 24 hours has been ultra-extreme, at +/- 10.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.
The market has started things cautiously this week reversing almost all of last week's gains. Laura and Stevie discuss this session which continued to get worse as the day went on and the two main catalysts that could impact markets through this week. They look at today's performance where almost all of the sectors have slipped, the stocks that were in focus, and what to expect across the final week of the month. The content in this podcast is prepared, approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814. The information does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information before acting and if necessary, seek appropriate professional advice.See omnystudio.com/listener for privacy information.
Following its worst session, Aussie shares are anticipated to stage a rebound, buoyed by renewed investor confidence. Meanwhile, Wall Street has found its footing after a brisk sell-off, offering a steadying influence on global markets. Investors are recalibrating their predictions on potential rate cuts, with a keen eye on how the US market responds and stabilises in the wake of this adjustment. The content in this podcast is prepared, approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814. The information does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information before acting and if necessary, seek appropriate professional advice.See omnystudio.com/listener for privacy information.
Tom and Ryan look at U.S share markets which have advanced ahead of chipmaker Nvidia's results. Meanwhile weaker economic data pushes bond yields lower. And the team look ahead to assess the days earnings results. Plus the commodities and AUD. The content in this podcast is prepared, approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814. The information does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information before acting and if necessary, seek appropriate professional advice.See omnystudio.com/listener for privacy information.
Tom and Ryan deep dive into some of the biggest company results including Tyson Foods and Berkshire Hathaway, after the latter posted a record quarterly profit. Meanwhile, back in Australia, Ryan looks at results from building materials company James Hardie. Tom touches on European market performance overnight, plus the team have this mornings commodities and the AUD. The content in this podcast is prepared, approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814. The information does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information before acting and if necessary, seek appropriate professional advice.See omnystudio.com/listener for privacy information.
A nervous day for European share markets ahead of the first day of trading since the purchase of Credit Suisse. Markets started the day sharply lower, but have recovered slightly, with the London Stock Exchange closing on around 0.9 percent. In Switzerland, Credit Suisse's new owner UBS also closed on 1.5 percent higher. Europe correspondent Catherine Field told Mike Hosking the central banks are adamant it's not a repeat of 2008. She says the banks are saying it might look bad, and it's not good that UBS has had to take over Credit Suisse, but they're not in a recession. LISTEN ABOVESee omnystudio.com/listener for privacy information.
A nervous day for European share markets ahead of the first day of trading since the purchase of Credit Suisse. Markets started the day sharply lower, but have recovered slightly, with the London Stock Exchange closing on around 0.9 percent. In Switzerland, Credit Suisse's new owner UBS also closed on 1.5 percent higher. Europe correspondent Catherine Field told Mike Hosking the central banks are adamant it's not a repeat of 2008. She says the banks are saying it might look bad, and it's not good that UBS has had to take over Credit Suisse, but they're not in a recession. LISTEN ABOVESee omnystudio.com/listener for privacy information.
Half a trillion dollars have been wiped from the value of bank shares around the world as financial shocks dived this week. The fallout is ongoing after the collapse of Silicon Valley Bank (SVB) spreads through global markets. The authorities are stepping in to get the situation under control, but some deposit holders are still feeling nervous. For now, many analysts say they think the shock will be contained. (Picture: Silicon Valley Bank Collapse. Picture Credit: Getty Images)
Half a trillion dollars have been wiped from the value of bank shares around the world as financial shocks dived this week. The fallout is ongoing after the collapse of Silicon Valley Bank (SVB) spreads through global markets. The authorities are stepping in to get the situation under control, but some deposit holders are still feeling nervous. For now, many analysts say they think the shock will be contained.
In the latest episode of Stocks Neat, which is our final episode of 2022, Steve and Gareth are discussing small-cap stocks and why they might be an interesting place to be investing in 2023. Small-caps have been hit harder than the rest of the market, so many are already looking very cheap as we head into an expected recession. There is no new whisky tasting this time, but Gareth and Steve recap their favourite bottle from previous episodes.Harvey Migotti, co-portfolio manager of the Forager International Fund, joins Steve for a deep dive on Yeti, one of the small-cap stocks in the fund portfolio, and why they believe this is a great business to own. Make sure you don't miss this interesting discussion.We'd love your feedback. If you like what you're hearing (and what we're drinking), be sure to follow and subscribe - we're doing this every month. You can also find us on:Twitter - @ForagerFundsFacebook - Forager Funds Management LinkedIn - Forager Funds ManagementInstagram - Forager_FundsFor regular videos, investment insights, and fund updates, visit www.foragerfunds.com.
The Commerce Commission released its final report on the building supplies sector yesterday, giving investors time to respond accordingly. The Commerce Commission report was focused around rebates and regulation, and stressed the importance of enforcing fairer competition in building supplies. Frances Sweetman, Portfolio Manager at Milford Asset Management observed that Fletcher Building's share prices have stayed stagnant. They may dip a little in the coming months, but it's unclear. LISTEN ABOVESee omnystudio.com/listener for privacy information.
Hosts Dave Smith and Rebeca Ibarra are updating the news, all day, every weekday Welcome! Colorado shooter faces murder and hate crime charges [Share] Biggest rail union rejects labor deal [Share] Markets move on China COVID deaths and Iger's return [Share] Donald Trump, Jordan Peterson and Kanye West back on Twitter [Share] Fireball flies over Toronto [Share] We're refreshing our headlines Jack Daniel's begs Supreme Court to hear dog toy case [Share] Reality stars Todd & Julie Chrisley face fraud sentencing [Share] Two prominent Iranian actresses arrested for dissent [Share] Plans for single-pilot passenger flights [Share] The “leap second” is voted out [Share] Talk to you soon!
In the November edition of SB Talks, Stanford Brown CEO Vincent O'Neill speaks with Chief Investment Officer Ashley Owen to discuss: US inflation, unemployment & wages growth - will rate hikes slow? US election results - why they are good for share markets Global share markets - still over-priced, but some sectors are cheap Collapse of FTX crypto exchange - 'the next Warren Buffett' didn't last long World population reaches 8 billion - some implications for long term investors
Hosts Rebeca Ibarra and Rebecca Knight are updating the news, all day, every weekday Welcome! Crypto declines, rival exchanges merge [Share] Markets vote for political gridlock [Share] US asks banks to do business with Russia [Share] Someone won the $2.3 billion Powerball [Share] Twitter usage surges after Musk's takeover [Share] Spread the word! Florida and Missouri ban federal monitors [Share] Wisconsin to count military votes [Share] Pennsylvania voters race to fix undated mail ballots [Share] YouTube Shorts arrive on TV screens [Share] Should 16-year-olds vote? [Share] What are the key midterm races to watch? [Share] Thanks for listening!
In this episode of Stocks Neat, Steve and Gareth talk about how the tech bust has finally hit the likes of Alphabet, Microsoft and Meta, with some very low growth rates coming from these tech giants that have outperformed for decades.They also chat about the impending Musk takeover of Twitter, including the open letter of demands written by Twitter employees, and whether they think it will have an impact on Musk's plan to fire a significant percentage of the workforce (spoiler alert - they don't). This is all washed down with Oban Single Malt whisky from Oban, Scotland.We'd love your feedback. If you like what you're hearing (and what we're drinking), be sure to follow and subscribe - we're doing this every month. You can also find us on:Twitter - @ForagerFundsFacebook - Forager Funds Management LinkedIn - Forager Funds ManagementInstagram - Forager_FundsFor regular videos, investment insights, and fund updates, visit www.foragerfunds.com.
Hosts Rebeca Ibarra and Qayyah Moynihan are updating the news, all day, every weekday Welcome! Nancy Pelosi's husband attacked in their home Friday morning [Share] Elon Musk officially owns Twitter [Share] Jim Cramer apologizes [Share] Tom Brady and Gisele Bündchen confirm divorce [Share] Jerry Lee Lewis has died [Share] Check back later today! Man sentenced to over 7 years in prison for Jan 6 riot [Share] Markets rebounded in the afternoon [Share] Japan offering subsidies for high electricity prices [Share] The hole in the ozone continues to shrink [Share] World Series starts tonight [Share] What it's really like being a stay-at-home girlfriend [Share] Have a great weekend!
Calendar year to date, the stock and bond markets have produced some of the worst returns on record, which is unusual because bonds and stocks are typically negatively correlated. In fact, this has only happened two times over the past 96 years, as illustrated in this chart. Even gold, commodities and property have lost value this year. It's really been a horrible market for investment returns. I discuss the key risks that have driven markets lower below, as well as highlighting the investment opportunities that exist as a result. How high will interest rates rise and for how long? I think the biggest factor that is creating the most uncertainty is what the terminal cash rate may be i.e., how high will central banks have to raise rates to reduce inflation. I don't think the market will begin any sustainable recovery until the terminal cash rate becomes clear and ascertainable.If the terminal cash rate turns out to be lower than what the market has priced in, then it is possible that markets could rebound strongly. In Australia, the market has priced in a terminal cash rate of 4.0%, so it's entirely possible that the market has over-sold, since no economists expect the RBA to raise rates by another 1.40%. For example, the big 4 banks forecast the terminal cash rate to be 3.1-3.6% which is an increase by another 0.5% to 1.0% over the coming 6 to 9 months. In the US, its equivalent cash rate is currently set at 3.00-3.25% and the market is expecting a terminal rate of between 4.5-5.0%, so it seems the US Fed Reserve has a lot more work to do than the RBA does in Australia. My point is that until we see successive data that confirms inflation has begun returning to normal levels, the market cannot accurately price in an accurate terminal cash rate. Will there be a recession? If so, how deep? In response to rising inflation, central banks have hiked interest rates faster that anytime in history. Normally, when a central bank wants to tighten monetary policy, it does so less aggressively so that it can measure the impact that higher rates is having on the economy. This more measured approach allows central bankers to adjust their approach to ensure it doesn't raise rates too far and cause a recession i.e., slow economic growth too much. Given most economic data lags by two to three months, central banks are really flying blind at the moment. That is, they won't be able to measure the impact of current interest rate settings until the end of this year or start of 2023. As such, there's a risk that they raise rates too fast and too hard and send the economy into a recession. How deep that recession is will depend on how much they overtightened rates. And that is yet to be seen, but it's a risk that markets are contemplating. Will there be a nuclear war?Of course, the most significant geopolitical risk is Putin using nuclear weapons in its conflict with the Ukraine. If it does, the Western alliance will have to respond and of course that could spiral into World War III. I am certainly not a geopolitical expert, so I cannot offer any commentary about this risk other than to say it's a risk factor that must be impacting markets. What damage will energy prices inflict The price of domestic energy (gas and electricity) is rising around the world, especially in the UK where prices have more than doubled over the past 12 months. These price increases are likely to cause economic pain for residences of northern hemisphere countries as they approach winter. Residents therefore must tackle higherTo subscribe to Stuart's blog: https://www.prosolution.com.au/stay-connected/
In October's edition of SB Talks, our CEO Vincent O'Neill speaks with Chief Investment Officer Ashley Owen, to discuss: How far will interest rates rise? What is a ‘fair' or ‘normal' level of interest rates for a country? How bond markets step in to dictate government spending & borrowing policy – like in Britain 2 weeks ago Why we are probably heading for recession But the good news: Why recessions are almost always good for share markets!
Hosts Kerry Donahue and Rebecca Knight are updating the news, all day, every weekday Welcome! Entire Uvalde school police force pulled [Share] NYC mayor declares migrant emergency [Share] Markets close lower on strong September jobs report [Share] Young adults became more neurotic in the pandemic [Share] Illinois starts guaranteed income pilot [Share] Please help spread the word! Ireland opens secret adoption records [Share] Volcano fire damages Easter Island statues [Share] Major study on pregnancy and antidepressants [Share] Another cheating scandal [Share] Queen Latifah has a no death clause [Share] Coming up! The sister of a Jeffrey Dahmer victim speaks out [Share] Thanks for listening!
Hosts Rebeca Ibarra and Dave Smith are updating the news, all day, every weekday. Welcome! The Mar-a-Lago Affidavit: Key revelations [Share] Markets tank after Fed Chair's inflation speech [Share] Moderna suing Pfizer [Share] Truth Social's financial difficulties [Share] Share your favorite stories Coming up: a streaming industry news recap Student room scans ruled unconstitutional [Share] Forbes says half of all Bitcoin trades are fake [Share] Start-up changes the accents of call center workers [Share] Burning Man returns to the desert [Share] Jared Kushner says he may be immortal [Share] What's been happening with streaming lately? [Share] Have a great weekend!
Hosts Rebeca Ibarra and Dave Smith are updating the news, all day, every weekday. Welcome! The Mar-a-Lago Affidavit: Key revelations [Share] Markets tank after Fed Chair's inflation speech [Share] Moderna suing Pfizer [Share] Truth Social's financial difficulties [Share] Share your favorite stories Coming up: a streaming industry news recap Student room scans ruled unconstitutional [Share] Forbes says half of all Bitcoin trades are fake [Share] Start-up changes the accents of call center workers [Share] Burning Man returns to the desert [Share] Jared Kushner says he may be immortal [Share] What's been happening with streaming lately? [Share] Have a great weekend!
Hosts Rebeca Ibarra and Dave Smith are updating the news, all day, every weekday. Welcome! Iranian charged in plot to kill John Bolton [Share] Trump takes the 5th [Share] Markets surge on inflation news [Share] Google to Apple: Fix the green bubble [Share] Biden gives Jon Stewart shout out [Share] We're updating the news Feeling the summer slog? We want to hear from you! Monkeypox vaccine to be split between 5 people [Share] Applebee's and IHOP attract wealthier customers [Share] Beluga whale in the Seine has died [Share] Apple TV withholds viewership numbers [Share] Italians won't get the door for Dominos [Share] Meta and Apple are in deep competition over the metaverse [Share] Talk to you soon!
Hosts Rebeca Ibarra and Kerry Donahue are updating the news, all day, every weekday. Welcome! Listen to Alex Jones judge dress him down for lying [Share] Biden signs order on abortions [Share] Dodgers' Vin Scully dead at 94 [Share] Congresswoman killed in car accident [Share] Markets jump on waning recession fears [Share] We're updating the news Coming up: the conservative push to rewrite the Constitution Embryos in Georgia are now dependents [Share] Airbnb apologizes for ‘slave cabin' [Share] State Department issues “worldwide caution” [Share] Man trying to burn spider starts wildfire [Share] ‘Batgirl' movie never sees the light of day [Share] How a group of Republicans are trying to rewrite the Constitution [Share] Talk to you soon!
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Monday 1 August 2022 Share markets rally, but no-one's sure that the worst is over. Also today: Prime Minister Anthony Albanese unveils the referendum question on giving indigenous Australians a voice. Two more unusual business consequences of COVID And we'll tell you which four global companies made $US50 billion in just three months. Support the show: https://fearandgreed.com.au/all-episodesSee omnystudio.com/listener for privacy information.
Hosts Rebeca Ibarra and Dave Smith are updating the news, all day, every weekday. Welcome! Jan 6 texts from Trump's DHS chief missing [Share] Hawaiian couple: Spies for decades? [Share] Russia wants more for Griner release [Share] Will Smith again apologizes for slap [Share] Markets end best month in two years [Share] We're updating the news Coming up: everybody hates Instagram Webex by Cisco People under 50: Wait on second booster [Share] Clarence Thomas won't be teaching anytime soon [Share] HIV patient gets stem cell transplant and goes into remission [Share] German pol weighs canceling Oktoberfest [Share] Teen uses Matt Gaetz insult to raise more than $700k [Share] Beyonce drops ‘Renaissance' [Share] The TikTok-ification of Instagram [Share] Have a great weekend!
Hosts Rebeca Ibarra and Dave Smith are updating the news, all day, every weekday. Welcome! Jan 6 texts from Trump's DHS chief missing [Share] Hawaiian couple: Spies for decades? [Share] Russia wants more for Griner release [Share] Will Smith again apologizes for slap [Share] Markets end best month in two years [Share] We're updating the news Coming up: everybody hates Instagram Webex by Cisco People under 50: Wait on second booster [Share] Clarence Thomas won't be teaching anytime soon [Share] HIV patient gets stem cell transplant and goes into remission [Share] German pol weighs canceling Oktoberfest [Share] Teen uses Matt Gaetz insult to raise more than $700k [Share] Beyonce drops ‘Renaissance' [Share] The TikTok-ification of Instagram [Share] Have a great weekend!
In this episode of Stocks Neat, at a more important time than ever, Steve and Gareth remind listeners that they're only ever seeing a tiny percentage of a company trade hands. In fact, the valuation of a company and the price one pays for it can be very different. The guys also consider what's driving the magnitude of the current market moves and share some thoughts on how to navigate it. This month, they're sipping on Bushmills - a single malt Irish whiskey aged 10 years.We'd love your feedback. If you like what you're hearing (and what we're drinking), be sure to follow and subscribe - we're doing this every month. You can also find us on:Twitter - @ForagerFundsFacebook - Forager Funds Management LinkedIn - Forager Funds ManagementInstagram - Forager_FundsFor regular videos, investment insights, and fund updates, visit www.foragerfunds.com.
In this episode, Luke and Steve chat about: - the current correction in share markets and the potential outcomes - how to insualte against inflation risk - invest in assets that generate income and can grow in value - the demise of some market "darlings"
Senior market analyst Jeffrey Halley joins the show to discuss interest rates and a number of other financial matters, including why New Zealanders should be putting their money in term deposits for more than 12 months.
Hosts Rebeca Ibarra and Dave Smith bring you real-time news, updated when it happens. It's fresh like live radio, but on-demand like podcasts. Welcome! John Hinckley Jr. concert canceled [Share] Senators race to define “boyfriend” [Share] World Cup cities announced [Share] 17th century shipwreck discovered [Share] Markets tread water [Share] Coming up: A "miracle" weight loss drug? Webex by Cisco Final Varsity Blues case ends in only acquittal [Share] DOJ wants Jan 6 Committee's evidence [Share] Ron DeSantis doubles down [Share] Watergate at 50 [Share] Drake drops 7th album [Share] New weight loss drug could be a game changer [Share] Talk to you soon!
The Squiz is your shortcut to the news. More details and links to further reading for all of today's news can be found in The Squiz Today email. Sign up (it's free!) - www.thesquiz.com.au.Other things we do:Politics Today - a weekday newsletter getting you across the latest in politics, both here and abroad. Sport Today - a sports news podcast designed to keep you ahead of the game. Or sign up to the newsletter here.Squiz Shortcuts - a weekly explainer on big news topicsSquiz Kids - a news podcast for curious kids. Age appropriate news without the nasties! See acast.com/privacy for privacy and opt-out information.
In today's episode, we break down the history of share markets, focusing on the ASX, to look at how we ended up with the system we currently have. We also look at the makeup of the ASX 100 years ago and how this has changed over time.
In this episode of Stocks Neat, Gareth Brown and Steve Johnson discuss the electric vehicle revolution and a topic that's really gotten under Forager's skin: the scourge of stock-based compensation. And for this month's tasting, Gareth shares a single malt from The Scotch Malt Whisky Society, interestingly named "A Maple Syrup Mountain Spring" - don't miss out! We'd love your feedback. If you like what you're hearing (and what we're drinking), be sure to follow and subscribe - we're doing this every month. You can also find us on:Twitter - @ForagerFundsFacebook - Forager Funds ManagementLinkedIn - Forager Funds ManagementInstagram - Forager_FundsFor regular videos, investment insights and fund updates, visit www.foragerfunds.com.
In this episode, we discuss why we get booms and busts in the property market, and what property investors need to know about the psychology of the market. This includes a rundown of the boom, peak, downturn and trough phases of the property market and what investors are thinking at each phase. Ultimately this will allow you to manage your own psychology so you can make informed investment decisions.
New Zealand Herald's Business Editor at Large Liam Dann discusses the global share markets, unemployment and the ripple effects Armstrong Downes' liquidation may have.LISTEN ABOVE
In this episode, CIO Steve Johnson is joined by whisky-naysayer (and Forager's Senior Analyst) Chloe Stokes to discuss the bid for Twitter, social media monetisation, and finding control in volatile markets. Chloe also shares her experience as a younger investor and reveals the stocks (and burgers) currently on her watchlist. We'd love your feedback. If you like what you hear (and what we're drinking), be sure to follow and subscribe - we're doing this every month. You can also find us on:Twitter - @ForagerFundsFacebook - Forager Funds Management LinkedIn - Forager Funds ManagementInstagram - Forager_FundsFor regular videos, investment insights and fund updates, visit www.foragerfunds.com.
Geopolitical events, the effects on markets. Investing for Children, what are the options? What are Dividends, and the Tax Implications of them? Live Now Buy later housing schemes. https://www.ownhome.com/
In this episode of Stocks Neat, Forager's Steve Johnson and Gareth Brown taste-test a Tasmanian classic and answer the question: is whisky really a worthwhile investment? Featuring Tamikah from the Forager team, they also chat tech stocks, offer an update on Magellan, and discuss the drama at Lark Distilling Co. We'd love your feedback. If you like what you hear (and what we're drinking), be sure to follow and subscribe - we're doing this every month. You can also find us on:Twitter - @ForagerFundsFacebook - Forager Funds Management LinkedIn - Forager Funds ManagementInstagram - Forager_FundsFor regular videos, investment insights and fund updates, visit www.foragerfunds.com.
Grab a drink and tune into the first (official) episode of Stocks Neat, as Forager's Steve Johnson and Gareth Brown taste-test a dram from the Scotch Malt Whisky Society and talk travel, Omicron and share markets in 2021. They also reveal some of the lessons they've learned over the past year and the investment ideas they've changed their minds on.We'd love your feedback. If you like what you hear (and what we're drinking), be sure to follow and subscribe - we're doing this every month. You can also find us on:Twitter - @ForagerFundsFacebook - Forager Funds Management LinkedIn - Forager Funds ManagementInstagram - Forager_FundsFor regular videos, investment insights and fund updates, visit www.foragerfunds.com.
How much do you need to retire? the amount is smaller than you may think. APRA's (Australian Prudential Regulation Authority) lending restrictions attempt to cool a hot property market, what do borrowers need to know. October is often known as a 'bad' month for Share Markets, is there any truth to this? Social Medial and Financial Influencers, what you need to know.
Tuesday 21st September 2021 Iron ore prices fall below $US100 a tonne, hitting not just the big miners but also the national economy. Also today: Also another infrastructure asset gets a mega bid from an offshore buyer. The COVID news gets better. And we have a look at who’s winning the streaming wars. Find out more: https://fearandgreed.com.auSee omnystudio.com/listener for privacy information.
Sean Aylmer speaks to Cindy Leung, Senior Wholesale Relationship Manager at CMC Markets, about investing in stocks on US, European and Asian markets.Find out more: https://fearandgreed.com.auSee omnystudio.com/listener for privacy information.
How one person react behave .......SHARE Markets investment
This week Luke and Steve cover off on some of their Pet Peeves, financial ones that is. Luke has taken the time to digest the Berkshire Hathaway AGM, and shares some Gold Nuggets from the meeting. Cryptocurrency, and what successful investors have to say about it. The media at it again, economists and central banks are forewarning inflation, what does it mean for you and your investments. Please like, share, review or ask a question, we're more than happy to hear from you. If you're interested to pursue the Berkshire AGM, webcast link below. https://www.youtube.com/watch?v=gx-OzwHpM9k
Wednesday 12 May 2021 The federal government outlines a big spending budget with an election in mind. Also today: Markets rise, markets fall. The ASX and global markets tumble just 24 hours after hitting new highs. Victoria records a community transmitted case of COVID-19 but doesn’t go into lockdown, yet. And the availability of rental properties falls to the lowest level in almost ten years. Find out more: https://fearandgreed.com.auSee omnystudio.com/listener for privacy information.
In this episode with Dani - Biden tax proposals, Janet yellen on hiking rates, Sectors to watch out on ASX, US stock markets, & lot more! DISCLAIMER: Host/Guest are not Financial Adviser/Investment Consultant. All opinions expressed by host or his guests are for informational purposes only and should not be treated as investment/financial advice of any kind. "Spark your FIRE" and its team are not liable to the listeners or any other party, for the listeners use of, or reliance on, any information received, directly or indirectly, from the content in any circumstances. Please conduct your own research and obtain independent legal, financial, taxation and/or other professional advice in respect of any decision made in connection with this audio. Contact - sparkyourfirepodcast@gmail.com #ASX#StockMarket#BankStocks#CommercialRealEstate #FiatCurrency#Bitcoin#Blockchain#Dectralization #HardMoney#Worldreserve#Mining#POW#EnergyStorage #QEforever#CDBC#InvestorsPodcast#Libra#SDR#MMT #facebook#Snapchat#TechStocks#IndustrialWarehouse #Litecoin#Ethereum#Gold#Property#Artificial intelligence #Gold #Silver #Monetary policy
Sean Aylmer speaks to Scott Haslem, Chief Investment Officer at Crestone Wealth Management, about his expectations for the US and China in coming months, and the impact on share markets as economies continue to recover from the pandemic.Find out more: https://fearandgreed.com.auSee omnystudio.com/listener for privacy information.
This week our attention turns to global stocks post covid rebuild, as investment professionals the world over mull the opportunities and pitfalls of the various sectors in the market on the search for reliable growth. With traditional defensive stocks not currently behaving defensively, the new challenge lies in optimising global coverage that positions for growth whilst ensuring some downside protection is maintained.View the presentation slides - https://nucleuswealth.com/wp-content/uploads/2021/04/global-positioning.pdf In today’s investment webinar, Nucleus Wealth’s Head of Investments Damien Klassen, and Head of Advice Tim Fuller discuss Nucleus Wealth’s recent positioning in global equitiesOn the agenda:Global equities boomAustralian DollarFiscal Guns loadedCentral BanksInvestment outlookTo listen in podcast form click here: https://nucleuswealth.com/podcasts/?utm_source=youtube&utm_medium=direct&utm_campaign=podcastGet an obligation-free portfolio recommendation to see how we would invest for you: https://portal.nucleuswealth.com/register/?utm_source=youtube&utm_medium=direct&utm_campaign=podcastLearn more about the hosts: https://nucleuswealth.com/people/?utm_source=youtube&utm_medium=direct&utm_campaign=podcastFind us on social media: https://www.facebook.com/NucleusWealth/ https://twitter.com/NucleusWealth https://linkedin.com/company/nucleusw... Nucleus Wealth is an Australian Investment & Superannuation fund that can help you reach your financial goals through transparent, low cost, ethically tailored portfolios. To find out more head to https://nucleuswealth.com/?utm_source.... The information on this podcast contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen and Tim Fuller are an authorised representative of Nucleus Wealth Management. Nucleus Wealth is a business name of Nucleus Wealth Management Pty Ltd (ABN 54 614 386 266 ) and is a Corporate Authorised Representative of Nucleus Advice Pty Ltd - AFSL 515796
Housing Market, the continued rise of Australian Housing. What's caused this and can it last. Common Loan Interest Rate Structures, Fixed & Variable some of the Advantages and Disadvantages of each. Melissa Caddick. The Sydney woman who disappeared and allegedly stole millions from close associates. Game Stop, the spectacular rise and fall of a small US gaming Retailer. ASIC Financial Adviser Register. If you are receiving Personal Financial Advice, the person providing it should be on this register. If not 'Run the opposite Direction' https://moneysmart.gov.au/financial-advice/financial-advisers-register About the Money Men.... Steve and Luke are colleagues with a passion for educating people about financial matters. They believe that financial literacy is one of the keys to unlocking a person's potential to achieve wealth, whatever that may mean for them individually. When they are not recording The Money Men Podcast, they work as Licensed Financial Planners within Steve's Business. 'Steve May Financial Services'
Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news equity markets are on tenterhooks ahead of this week's opening.But first in China, their official PMIs for January were released overnight and paint a picture of a slipping expansion. The factory PMI dipped a bit more than expected and their services sector PMI reported a larger slip. These results come after officials have been suggesting they can pull back of stimulus support, so they may be having a re-think about that.That infrastructure stimulus has been a boon to civil construction companies. Excavator sales rose nearly 40% in 2020; January 2021 sales are expected come in more than double the year-ago level.In the Chinese mortgage market, there is growing evidence that residential borrowers are able to tap much cheaper mortgage funding that is supposed to only be available for businesses. Banks have stretched the criteria to allow homeowners into these revolving credit arrangements, ones that save borrower from the State-imposed interest levels on homeowners, designed to quell the froth in those residential markets.Speaking of froth, remember China's HNA conglomerate? It is about to disappear, with creditors filing to force it into bankruptcy. It couldn't escape the consequences of too much debt, no matter how low interest rates were. A the end of the day, if a business isn't profitable, no matter now low market interest rates are, they can't access them. Lenders want their money back.Sovereign governments however get more slack. But they had better watch out on food inflation. Vegetable prices have more than doubled in China from a year ago, and that will be an undoubted talking point during the Chinese New Year as families gather in the traditional homecoming. It is not a problem "more debt" can solve.At the same time, China is getting more muscular with its neighbours, sending "survey ships" into many of their waters. The Philippines is particularly aggrieved. It hardly seems the way to win friends, but Beijing does seem to want to be seen exerting its power.Japanese industrial production remains weak and ended 2020 down -3.2%. Any hope that they are in recovery seems to have stalled.But South Korean industrial production is on the rise with a better than expected result for December. But the same isn't true for South Korean retail sales.Across the Pacific, Americans’ incomes climbed for the first time in three months in December as a new round of government-aid efforts kicked in, priming their economy for stronger growth this year. However personal spending fell, minorly it is true, but it is for a second consecutive month and bears watching.Also improving is the Chicago PMI, a closely-watched heartland measure that came in better for January than expected.The latest consumer sentiment poll, this one from the University of Michigan, is largely unchanged.US pending home sales also improved on a year-on-year basis in their latest data, this lot for December.It is looking quite ominous for the opening this week on Wall Street. On Friday, the S&P500 fell -1.9% and the S&P500 futures suggest it will fall another -2.2% when it opens tomorrow.The latest global compilation of COVID-19 data is here. The global tally is rising faster, now at 102,758,000 and up +1.07 mln in two days. The UST 10yr yield will start today down just -1 bp at just over 1.07%, but it did reach 1.11% at the end of last week so from there it is a -4 bps fall. The price of gold will start -US$5 lower today at US$1848/oz.Oil prices are unchanged at US$52/bbl in the US while the international price is still at US$55/bbl.And the Kiwi dollar will open the week little-changed at 71.8 USc. Against the Australian dollar we are still at 94 AUc. Against the euro we are at 59.2 euro cents. That means our TWI-5 is at 73.4.The bitcoin price has fallen sharply again and is now at US$32,802 or a drop of -9.7% since this time Saturday.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. We will do this again tomorrow.
Welcome to Episode 2 of the Money and Investing Show. A space all about managing money and kickstarting you into the world of investing and finance. A series of bite sized episodes designed to simplify and equip you with the tools on how to get started along with some tips and tricks for those already investing.The goal of this show is to make investing more accessible to everyone, Introducing investing concepts and breaking down some of the jargon, common misconceptions and myths involved in stopping people from starting on their own journeyTodays episode covers:- What is a Share Market- How do Share Markets work- Indexes around the world- Primary and Secondary markets- What can be invested in (different types of assets)Throughout this series we hope you can find some key take aways to either; help you get started or polish your existing skillsLinks from Todays show:http://money.visualcapitalist.com/all-of-the-worlds-stock-exchanges-by-size/Music by:Ikson - https://soundcloud.com/ikson or https://youtube.com/ikson** Disclaimer**Please remember the information and opinions provided in this podcast is general advice only and does not constitute financial advice. This podcast was created without knowing individuals needs, financial situations or investment objectives. The hosts of this show may hold positions in the companies discussed. Before considering any investment please read the product disclosure statement and consider speaking to a liscenced financial professional
In this episode our CEO Vincent O’Neill is speaking with Chief Investment Officer Ashley Owen to discuss share markets, economic recoveries, and growing trade tensions. This month we discuss: Share market growth in November Why Australian shares have been slower to recover than the US Company Profit Outlook - To ‘V’ or not to ‘V’ The outlook for Australia-China trade relations Why Australia’s reliance on China matters for investors
Without wanting to seem too philosophical, I believe that life offers us lessons, but we must be prepared to look for them. As we are approaching the end of 2020, I thought it would be a good idea to reflect on what Covid has taught us about our financial decisions.I have been very proud of how my clients have stayed-the-course this year. Only one client insisted on selling down some investments when the pandemic hit. To be fair, there were some extenuating circumstances. Thankfully, we helped many clients invest new monies during the peaks of market volatility. Whilst these investments were made with the sole goal of maximising long-term value, their performance to date has been very rewarding.I wanted to share some important lessons that I think the Covid experience has offered us (even as a reminder).Expect markets to crashMarket corrections are not uncommon. They seem to occur every 8 to 12 years. Of course, the cause of these corrections is always different, unique and completely unpredictable. That’s why they cause a lot of volatility, because the market gets spooked by an event it didn’t or couldn’t have anticipated. And that’s why it always feels like “this time is different”.Whilst every crash feels different, they are all the same. Firstly, the market overreacts, and all investments are punished, almost regardless of quality and outlook. In March, everything fell in value – shares, bonds, gold… everything! But the reality is that a crisis will impact some asset classes to a greater extent.Secondly, markets tend to rebound much faster than we expect, which is evident in this chart I shared in a blog at the beginning of March.The lesson is to be ready for times of very high uncertainty. Stay the course. Don’t let these events tempt you to make any rash decisions i.e. selling. If appropriate, be prepared to make additional investments.In the midst of a crisis, focus on the long termIn times of a crisis, it’s difficult to focus on the long term because it’s hard to visualise how the crisis might play out. However, despite that, there is great value in sticking to the long game.For example, the world share index has generated good returns over the long run i.e. 10.7% p.a. between 1970 and 2019 to be exact. Investing in an index like this during a crisis might not generate above average returns in one month’s time, or even one years’ time. But because we know that markets always rebound strongly within a 5-year period after a crisis, it is likely it will generate above average returns in the medium term. It is this approach that serves investors well.And this is the approach I adopted when investing clients’ monies during March, April and May (and anytime really). I invested in a way that aimed to maximise medium to long term returns. I was not focused on trying to generate short term profits. However, as it turns out, the result in the short term have been fantastic.The lesson is that focusing on the long run helps people make investment decisions during times of (very) high uncertainty. In fact, it’s the only option, as adopting a short-term outlook tends to be paralysing.Cash buffers are importantHaving plenty of cash savings provides a safety net in case your income unexpectedly falls, or a large expense crops up. I typically advise my clients to hold between 6 and 12 months of living expenses in cash savings. Depending on your financial position and risk appetite, it might be important to hold more.Whilst it’s unlikely that you will be without any income for between 6 and 12 months (and without income protection insurance cover), it does provide that “sleep at night” factor. A cash buffer ensures you have sufficient time to make whatever adjustments that are prudent, including selling assets. This reduces unnecessary stress and anxiety and pressure to sell assets quickly.If you don’t have between 6 and 12 months of living expenses in cash savings, then perhaps this should be your number one goal.Financial security gives you a ‘sleep at night’ factorMany people have been working hard for many years or decades and have very little to show for it other than their home and compulsory super. Building a nest egg outside of these assets provides greater financial strength to weather any storms. If you lose your job and have liquid investment such as shares, you know you have a fallback position. You have assets to sell, other than your home.If you haven’t been regularly investing, perhaps Covid is your wake-up call to start doing so. There will be another crisis, probably within the next 10 or so years, that will cause a high level of uncertainty and pain. It might not be another pandemic. It might be something else. But there will be something. Building a nest egg of assets that you can fall back on makes good sense. And the best time to start is today.Be careful what information you feed your brainI stopped watching commercial TV when the pandemic hit in March, and I know many of my colleagues and friends did too. The coverage was often alarmist and unbalanced. It didn’t help me to become better informed. It just created higher levels of uncertainty.We all know that we cannot expect to have a healthy body if we only eat unhealthy foods. The same goes for our brains. We must proactively filter what we watch and read. We cannot expect to make good, long term financial decisions if we are in a constant state of anxiety influenced by misinformation.To a lesser extent, this also applies in normal, “non-pandemic” times too. Some parts of the media will talk negatively about investing, borrowing, the property market, financial advisors and so on. They will explore endless reasons why not to invest, not trust professionals, to delay buying a home and so on. This content is written to attract your attention (which they sell to advertisers), not help you.This year can be a lesson to us all, to think very carefully what we read, what we watch and the people we spend time with.I eat my own cookingFinancially, this year has been a wonderful year for my wife and me. We have bought and sold residential property when no one else wanted to (i.e. during a seemingly endless stage 4 lockdown in Melbourne). We have invested in shares and commercial property.I share this information to make the point that I follow my own advice. Often the best time to invest is when no one else is willing to do so.One thing is for sureThere will be another crisis. It will be a unique event. In the height of all the hysteria and uncertainty, it will feel like the world has changed forever.So, I have two important questions for you. What can you start doing now to prepare yourself and your family for the next crisis? And what will you do differently when it hits?
Mauro Forlin, MD of Global & Local Asset Management
ಯುದ್ಧ, ಕ್ಷಾಮ ಹೀಗೆ ಏನೇ ಅವಘಡಗಳಾದರೂ ದೇಶವೊಂದರ ಶೇರು ಮಾರುಕಟ್ಟೆ ನಿಲ್ಲುವುದಿಲ್ಲವೇಕೆ? ಕೋವಿಡ್ ಸಾಂಕ್ರಾಮಿಕ ರೋಗ ತಡೆಗಟ್ಟಲು ಇಡೀ ದೇಶ ತಿಂಗಳುಗಟ್ಟಲೆ ಬಂದ್ ಆಗಿದ್ದರೂ ಶೇರು ಮಾರುಕಟ್ಟೆ ಯಥಾವತ್ತಾಗಿ ನಡೆಯಲು ಹೇಗೆ ಸಾಧ್ಯ? ಒಂದೇ ದಿನದಲ್ಲಿ ಮುಕೇಶ್ ಅಂಬಾನಿಯ ಸಂಪತ್ತು ಇಷ್ಟು ಕೋಟಿ ಹೆಚ್ಚಿತು, ಅಮೇಜಾನಿನ ಜೆಫ್ ಬೇಜೋಸ್ ಇವತ್ತು ಬಿಲಿಯನ್ ಡಾಲರ್ ಕಳೆದುಕೊಂಡ ಎಂದು ಸುದ್ದಿ ಮಾಧ್ಯಮಗಳಲ್ಲಿ ಓದುತ್ತೀರಿ. ನಿಜಕ್ಕೂ ಇಲ್ಲಿ ಆಗುವುದೇನು? ದಿನವೊಂದರಲ್ಲಿ ಅಷ್ಟು ಹಣ ಸಂಪಾದಿಸಲು ಇಲ್ಲವೇ ಕಳೆದುಕೊಳ್ಳಲು ಹೇಗೆ ಸಾಧ್ಯ? ಇವೇ ಮೊದಲಾದ ಕುತೂಹಲಕಾರಿ ಪ್ರಶ್ನೆಗಳೊಂದಿಗೆ ನಾವು ನಿತಿನ್ ಜಗತಾಪ್ರೊಂದಿಗೆ ನಡೆಸಿದ ಮಾತುಕತೆಯ ಎರಡನೆಯ ಹಾಗೂ ಅಂತಿಮ ಭಾಗ ಅರಳಿಕಟ್ಟೆಯ ಇಪ್ಪತ್ತೊಂದನೆಯ ಸಂಚಿಕೆಯ ರೂಪದಲ್ಲಿ ನಿಮ್ಮ ಮುಂದಿದೆ. Credits: Music : Crescents by Ketsa Licensed under creative commons. Icon made by Freepik from www.flaticon.com --- Send in a voice message: https://anchor.fm/aralikatte/message
ಶೇರು ಮಾರುಕಟ್ಟೆ ಅಂದರೇನು? ಅದು ಹೇಗೆ ಕೆಲಸ ಮಾಡುತ್ತದೆ? ಶೇರು ಮಾರುಕಟ್ಟೆಯಲ್ಲಿ ಹಣ ಹೂಡಿಕೆ ಹೇಗಾಗುತ್ತದೆ? ಶೇರು ಮಾರುಕಟ್ಟೆಯಲ್ಲಿ ಯಾರು ಹಣ ಹೂಡಿಕೆ ಮಾಡಬಹುದು? ಇವೇ ಮೊದಲಾದ ಕುತೂಹಲಕಾರಿ ಪ್ರಶ್ನೆಗಳೊಂದಿಗೆ ನಾವು ನಿತಿನ್ ಜಗತಾಪ್ರೊಂದಿಗೆ ನಡೆಸಿದ ಮಾತುಕತೆಯ ಮೊದಲ ಭಾಗ ಅರಳಿಕಟ್ಟೆಯ ಇಪ್ಪತ್ತನೆಯ ಸಂಚಿಕೆಯ ರೂಪದಲ್ಲಿ ನಿಮ್ಮ ಮುಂದಿದೆ. ಅರಳಿಕಟ್ಟೆಯ ಚರ್ಚೆಯಲ್ಲಿ ಭಾಗವಹಿಸಿದವರು ನಿತಿನ್ ಜಗತಾಪ್, ಮುಕುಂದ್ ಸೆತ್ಲೂರ್ ಹಾಗೂ ಸುಪ್ರೀತ್ ಕೆ ಎಸ್. Credits: Music : Crescents by Ketsa Licensed under creative commons. Icon made by Freepik from www.flaticon.com --- Send in a voice message: https://anchor.fm/aralikatte/message
Welcome to Finance and Fury Last week - The lead up of markets in relation to complexity theory – phase transitions and feedback loops in markets https://financeandfury.com.au/how-to-analyse-share-markets-by-treating-them-as-a-complex-system/ Today – look at the question - How do we know that we are in for a collapse – or better - what are the early warning signs in of a change in feedback loops triggering a phase transition a complex system There are signals – complexity can pick up on but equilibrium can’t – Uber listing on the market with $1.5bn loss – signal Today's episode is a conceptual framework expanding on the previous episode – particularly focus on market fragility and what signals point to it increasing The last episode talked about how after a while the same positive feedback loop can create an increased instability in financial markets – this can occur between public and private investors – but after enough of the same feedback – exposes markets to the risk of a systemic risk escalation. But what sort of events act as generic early warning signals for chaos? – i.e. phase transition in the markets To start – how is the probability of critical transformations assessed? What acts as early warning signals? Preface this – nobody can ever predict the exact point at which the system transforms – going through a phase transition of stable to collapse – financial markets are stochastic system - having a random probability distribution or pattern that may be analysed statistically but may not be predicted precisely Events that push the market out of equilibrium happen randomly – at any time – but the probability of one event triggering a collapse is low if the markets around a long term equilibrium between buyers and sellers – No net money entering or leaving the market But when more net money enters or leaves markets - what we can see is when the system (share market) has become inherently unstable, fragile, vulnerable – see bigger chances of large gains or losses Lots of money entering markets – through feedback loops - starts to exponentially increase the chances of anyone small perturbed event being the trigger for critical phase transition – right now All about probability – increasing with the nature of markets and the early warning signs Another preface – expansion of similar policies that have created a bubble are currently continuing – QE4, printing press with cheap money – may create more of a bull run in the markets over the next 12 months But these events create more of a fragile market – so while the markets may run for the next few months to years, the collapse will be of a bigger magnitude when it occurs When markets collapse – it is chaos – thankfully a school of complexity theory helps with this – that is chaos theory Jeff Goldblum – his character from Jurassic Park is a mathematician who specialises in chaos theory Chaos theory is very useful when the apparent randomness of chaotic complex systems (such as a share market) has an underlying pattern, along with feedback loops creating repetition and self-similarity and self-organization The metaphor for this behaviour is that a butterfly flapping its wings in China can cause a hurricane in Texas – The butterfly effect describes how a small change in one state of a deterministic nonlinear system can result in large differences in a later state, meaning there is sensitive dependence on initial conditions. What is chaos theory a branch of mathematics focusing on the behaviour of dynamical systems that are highly sensitive to initial conditions – looking at the theoretical probability of chances happening in non-linear models Initial conditions - called a seed value, is a value of an evolving variable at some point in time designated as the initial time – in financial markets – the variables change every second the market is open – number of buyers, sellers, currency exchange, employment, costs – many variables – at any given point – say now is time t – where do each of these lie? – then aims to look at the probability of something happening from here Chaos relates to the Sensitivity to initial conditions – this is a key characteristic of complex deterministic systems But due to the nature of complex systems – the system may change dramatically without a change to initial conditions, but rather as the result of moving beyond critical tipping points, or points of no return Why is it almost impossible to time market? Small differences in initial conditions- even due to rounding errors in numerical computation – so each calculation based around the assumptions can yield widely diverging outcomes - renders long-term prediction of market behaviour impossible - behaviour is known as chaos: Chaos: When the present determines the future, but the approximate present does not approximately determine the future. All this means is that markets may collapse at any time for any number of reasons – hence chaotic - Collapses are well explained by the nature of complex systems – due to the features of complex systems – go through 6 main: Cascading failures – there is a high level of interconnection in complex systems – lots of buyers and sellers following a crowd – creates a strong coupling between components in complex systems – i.e. buyers and sellers and the shares themselves A failure in one or more components can lead to cascading failures which may have catastrophic consequences on the functioning of the system – cascading is thanks to interconnection Localised attack may lead to cascading failures and abrupt collapse in spatial networks. Complex systems can be open systems – like the share market which is frequently far from energetic equilibrium: This is fundamental analysis – what is the share worth based on the FCF models – and what is it trading at But despite this flux, there may be pattern stability Complex systems may have a memory - The history of a complex system is important due to the cyclical nature of human/investor behaviour – being driven by fundamental human emotions of fear and freed Because complex systems are dynamical systems they change over time, and prior states may have an influence on present states. More formally, complex systems often exhibit spontaneous failures and recovery as well as hysteresis. Interacting systems may have complex hysteresis of many transitions – crowd behaviour and panics/hysteria Dynamic network of multiplicity - dynamic network of a complex system – how connected is the system to the environment? The system is the market – the environment is the world – i.e. every part that interacts with the market from wages, confidence, debt level Relationships are non-linear - In practical terms, this means a small perturbation may cause a large effect – i.e. the butterfly effect - a proportional effect, or even no effect at all. In linear systems, effect is always directly proportional to cause Relationships contain feedback loops - Both negative (damping) and positive (amplifying) feedback are always found in complex systems The effects of an element's behaviour are fed back to in such a way that the element itself is altered but in the non-linear fashion Current signs and signals - See a lot of listing on share markets – seen it with tech companies that aren’t making money but are listing on the exchange – payment platforms, tech start-ups, ones like Uber – signs of a peaking of markets Derivative counter party positions are at an all time high - $1,200 Trillion estimate Cost of borrowing all time lows – free money to bankers so no risks for gambling – if you could gamble on CC for 0% interest? Aus banks offering Instalment warrants – geared equity products being issued in the billions – self-funding through dividend ETF bubble – passive inflows and technology – talked about this already – but of the $15trn printed recently by central banks - $10bn in passive ETF/alternative structures One of the biggest ones – Credit/lending in markets all time high in like NYSE – check out graph at website (Thanks to advisor perspectives for putting together) Back in Dot Com bubble – Negative balance 130bn at peak – went to -45bn while market dropped 47% Back in Pre-GFC 2007 October 2019 – sitting at $240bn but was at $330bn back in July 2018 Stable/slowdown into Chaotic – Phase transition – The lag between net leverage being withdrawn from markets - Occurs every time – cyclical non-deterministic patterns Markets go up – then go down – the size of the transitions can differ – it looks like a big one is due - Pretty heavy episode – leave it there Next episode - explore the current possible triggers for the markets Thanks for listening to today's episode. If you want to get in contact you can do so here: http://financeandfury.com.au/contact
Welcome to Finance and Fury - Listen to last Monday episode on Share as a complex system – today diving in to discuss the application of a complex system and a financial collapse – or pre collapse – talk about phase transitions – build up and slowdown – pre-collapse Last ep - Complex is non-linear - more in the relationship of inputs and outputs than direct relationships of cause and effect Also Adaptive – so markets are evolving, dynamical as people will change their behaviour Shares have three characteristics of complex dynamical systems highly unpredictable - due to their non-linear relationships / interactions contagion effects – panic or bubbles are things that spread very quickly – through being interconnected modularity – while the whole system is well connected parts of the system are more connected within than between, which may help its resilience, or the ability for the system to return to equilibrium after turbulence broad inter-connectedness of global markets - only increased with globalization, the vast network of factors at play, the flipping correlation between assets over time External crises create a sudden shock experienced by financial markets over history – creates a far-from-equilibrium phenomena which is common in complex systems. financial markets are typical VUCA - Volatility, Uncertainty, Complexity, Ambiguity they are interconnected, interdependent, non-linear and a structurally volatile complex system Metaphor - Avalanche – an avalanche is a complex system – Snowflakes and avalanches – avalanche is a good metaphor for financial collapse – systems analysis for avalanche is the exact analysis for the collapse of one bank, collapsing into another – As an example – say one Snowflake is one mortgage, or derivative position within a bank collapsing – how many does it take before one bank collapses – triggering more collapses in the system- both avalanche and bank collapse are complex systems – going through phase transition – something used in physics Phase is a state of being – steady, collapse, rebounding – so a transition is going from Steady to collapse to new paradigm – Helps o study collapse of avalanche – complexity offers insights into how financial markets behave – Important to distinguish between something that is complex and complexity – Something complex is linear – like a clock – or motor – constrained, but not complex – Complexity is different – parts are interactive and adaptive – which branch into infinity of outcomes You might know what may occur – but not why or truly how – has a massive computation problem – limits risk management Example - back to the Avalanche – people at risk never really know when it will happen – but know that conditions are different and likely to affect chances – snow pack sides – systemic scale – larger = larger avalanche on expotential scale – Locate villages away =or stay above ridge line – or explode/descale and incur avalanche – cant predict but can try to stay safe Regulators help increase danger – allow Banks and derivatives are like snow packing up JP morgan to grow larger in size -like telling villages to build in path of avalanche Allowing value at risk as a regulation tool is like – building ski lift in path of avalanche WS execs know models unsound – but like it due to higher leverage – use anyway – bigger profits and higher buonus Regulations know as much as they want to land a job In the banks after The everyday man is in the path of the avalanche while bankers higher on the ridge A tipping point and subsequent inflection in any of those endogenous or exogenous subsets would clearly impact other subsets, and their own tipping points. Phase transitions - There is a space between order and chaos – this is called a phase transition zone where a system reaches criticality criticality – part of the self-organisation (characteristic in the last episode) – where investors have what’s called a critical point as an attractor – in English: how many people need to sell shares versus buy for the market point Example – Say sellers are represented by S – and there are 100 people in a market – S=1 – little change – if B = 99 – market likely to go up further – but this isn’t linear There is a threshold of S when reached that triggers more sellers Say S=10, this might trigger the next 20 to sell based around adaption and self organisation Now S=30, which might trigger the next 40 to sell = S=70 – now the market is in panic There is a threshold once reached triggers a phase transition – until the adaption and self organisation occurs to reverse the trend Probability of a collapse increases when the resilience of a system gets weaker Resilience in a system is the ability to absorb shocks and to retain the same structure functions and feedback as before. It implies persistence, adaptability, transformability of the system. It requires a wide basin of attraction, a good balance between order and disorder. Essential to resilience is the presence of negative feedback loops. Resilience falls and the system nears a critical transition zone. The system stands at an unstable equilibrium, from where it can flip at any time on closing up to the tipping point. Approaching criticality has tell tale signs and can suddenly and abruptly morph into a whole new contrasting system is a place where its resilience may get weakened to the point where disorder and randomness prevail, and lead into a totally different environment – i.e. going through a phase transition As the system approaches the peak in criticality - it can then drift away from an ordered predictable states into a chaotic unpredictable state Metaphor - where snowflakes suddenly accrete to form avalanches at some critical tipping point Phase Transitions occur around Changes In Feedback Loops How does the system degrade or reach criticality? How is resilience lost? How does it happen? – most common way is a change in feedbacks Feedback loops are essential forces in the build-up of any system Have mutual causal interactions between the elements of the system. The natural world is full of it. Negative feedback loops are the internal stabilizing forces of a system, as they bring the system back into balance early on after small perturbations. happens when self-correcting negative feedback loops weaken, and self-amplifying positive feedback loops arise. Self-amplifying positive feedback arise - $15trn printed in public funds from Central Banks - $10bn into passive index funds and similar investment products – feedback is 1) knowing this is happening and 2) continuing to invest for expected returns Self-correcting negative feedback weaken – the behaviours of the market adapt – eventually the ‘free ride’ probability lowers and people run for the hills and sell their shares – makes the markets fragile Years of monumental Quantitative Easing / Negative Interest Rate monetary policies affected the behavioural patterns of investors and changed the structure itself of the market, in what accounts as self-amplifying positive feedbacks. This has been going on since 2009 – we are yet to see the unintended consequence of extreme monetary policymaking play out – but it created a system that through feedback loops has a far-from-equilibrium status We are entering a system where the resilience weakens and market fragility approaches critical tipping points Years of printing money and pumping it into hard assets like property or shares hasn’t saved the economy Has created a zombie states in the economy making it even more fragile – leverage is up with little real growth A small disturbance is then able to provoke a large adjustment, pushing into another basin of attraction, where a whole new equilibrium is found. So while it is impossible to determine the threshold for such critical transitioning - very probable that we are already in such phase transition zone, where markets got inherently fragile, poised at criticality for small disturbances, and where it is increasingly probable to see severe regime shifts. Markets have entered into what complexity analysists call = the edge of chaos, a shift in feedback loops provokes a proximity to one or more critical tipping points. This is the zone where rare events become typical. Becoming evident that there is a decreasing rate of recovery and a critical slowdown in the effects of feedback loops – a general property of complex dynamical systems is that as they come close to a tipping point – which leads to a major critical transformation – or phase transition - a relatively minor disturbance can be the first slow flake that triggers an avalanche Most likely cause at this stage is the news of if we have a recession and the gig is up – people will see that the monetary policy on steroids approach has failed and the market will adapt – it will have reasons to suspect the possibility of a critical transition and the early-warning signals may enough to cause a panic The build up – helped with feedback loops - Financial Markets Are ‘Complex Adaptive Systems’ The more the market gets feedback in information - the tipping points get nearer markets are in an uncomfortable spot as the method of escape via lending cant An exogenous or endogenous trigger can easily push the equilibrium out of its small basin of attraction – enter into a phase transition and enter a new equilibrium
Welcome to Finance and Fury Series on Share markets as complex systems – a different way of thinking about them – This episode, discuss some basics of shares and introduce complexity theory – Nonlinear, Emergence, Spontaneous order, Adaption, Feedback loops Shares - What are they? Ownership in a company – private or public company – shares are the legal title to your ownership in a company As an owner of a company – you entitled to profits – that is what dividends are – decided by boards of public companies You also get price gains or losses based around how much people want the shares – Linked to performance but also irrational exuberance – future expectations Share market – is the collective representation of all the companies listed on an exchange ASX – Publicly available companies to purchase - Share Markets are Complex Systems I Used to break shares down to supply and demand – the equilibrium models – does work as an educational example (what and how) Failure in explanation of why – shows the after the fact obvious points - people demand less, then prices drop – or never dilute supply and shares go to $320k like Berkshire Hathaway Great explanatory tool for the mechanics – but essentially useless in practical terms A complex system is a system composed of many components which may interact with each other. What does this have to do with share markets? – Share market is the collective behaviours in decisions to buy or sell a company – Financial institutions, individuals, professional advisers like myself, every decision to buy or sell a holding in a share, bond, gold, etc. has characteristics of each – thanks to us and out human behaviours What are Complex systems - chiefly focuses on the behaviours and properties of systems. A system, broadly defined, is a set of entities that, through their interactions, relationships, or dependencies, form a unified whole - Systems exhibit complexity means that their behaviours cannot be easily implied from the very properties that make them difficult to model Any modelling approach that ignores such difficulties or characterises them as noise won’t be accurate or useful. Complex systems are always defined in terms of its boundary, which determines the entities that are or are not part of the system. Entities lying outside the system then become part of the system's environment. Share market entities – shares and buyers/sellers are part of the system directly Most other factors exist outside of the system (share market) – but they do have an effect – GDP, wages, confidence, individual preferences, regulations (SG conts), weather, etc. – probably hundreds of thousand things that can affect the environment of the share market System-wide or global properties are all characteristics of how the system (share market) interacts with its environment (all factors that influence individual behaviours) Behaviour of the system (share market) – does it go up or down tomorrow? Depends on the behaviour of those buying and selling shares – which in turn is affected by the environment of each individual doing the buying and selling Systems that are "complex" have certain distinct properties – due to the relationship of the system – five of the most important – in no particular order Nonlinearity - nonlinear system is a system in which the change of the output is not proportional to the change of the input – Something linear = add $100 to your bank account, have $100 in your account = then earn 2% interest = $2 return Nonlinear = put $100 into the share market = shares might be worth $60, or $160 plus earning 0% to 7% in income – changes all the time which is not dependent on the inputs Nonlinear systems may also respond in different ways to the same input depending on their state News or purchases of shares may yield significantly greater than or less than proportional changes in output of the price changes Most systems are inherently nonlinear in nature – a change in one variable over time, may appear chaotic, unpredictable, or counterintuitive, contrasting with much simpler linear systems Think about human behaviours – not linear – so why should share markets perform in the same way Why share forecasting is difficult to solve – but while chaotic behaviour may resemble random behaviour, it is in fact not random Example is the weather – can be chaotic, where simple changes in one part of the system produce complex effects throughout – high - and low-pressure systems meeting Emergence - occurs when an entity is observed to have properties its parts do not have on their own – therefore the behaviours only emerge when the parts interact in a wider whole Share markets – the parts are the shares themselves and the people buying and selling A share on its own won’t move in price – look at shares that have no buy/sell orders in a day – the price doesn’t move Someone then comes along and either sells or buys a lot of the shares – this moves the price This is the emergence of a price movement from the nature of us interacting with the shares Emergent states in the markets can occur in bubbles or crashes – neither can exist without investors over purchasing or selling investments Emergent states are used to refer to the appearance of unplanned organised behaviour in a complex system, emergence can also refer to the breakdown of organisation; it describes any phenomena which are difficult or even impossible to predict from the smaller entities that make up the system. Share crash or bubbles – if you are buying shares, you aren’t asking every investor in the world if they are buying the same shares directly – you might see news about others actions and take action – but it is often reacting to others actions – so not in cahoots with them and pre-planned a sale Example – 911 terrorist attacks created massive market sell offs – one event occurs creating the emergence of a selling state Spontaneous order - also named self-organization = the spontaneous emergence of order out of seeming chaos Related to emergence - describes the appearance of unplanned order, it is spontaneous order/self-organization Spontaneous order in financial markets can be seen in herd behaviour - group of individuals coordinates their actions without centralized planning. You have emergence from the interaction of investors with shares – but the bull/bear markets are the outcomes from spontaneous order – if everyone is buying due to signals = the markets will go up Manifestation of self-interested individuals who are not intentionally trying to create order through planning A free-market economy is an example of systems which evolved through spontaneous order Started with barter – You have someone with milk who wants to trade it for some wheat Two levels of the complex system and spontaneous order - spontaneous order is defined as "the result of human actions, not of human design" Shares are companies created and controlled by humans – human design The nature of spontaneous order isn’t created, controlled, and controllable by no one – human actions Spontaneous order is an equilibrium behaviour between self-interested individuals, which is most likely to evolve and survive, obeying the natural selection process "survival of the likeliest". Adaptation - A complex adaptive system is a system in which a perfect understanding of the individual parts does not automatically convey a perfect understanding of the whole system's behaviour. Fundamental v Technical analysis – Fundamentals (revenues, market share, management) of a company may be great, or horrible – but the prices will act in an unexpected manner Normally occurs in companies in vouge (next big thing industries like lithium shares, buy now pay later companies) Adaption relates to complex systems due to the networks of interactions - the behaviour of the market is not predicted by the behaviour of the individual shares – collective versus individual holdings Markets are adaptive in that the individual and collective behaviour of investors mutates and self-organizes – There is often a change-initiating event or collection of events – think about the GFC – wasn’t just due to Lehman Brothers collapse – there were many flow-on effects – one after another Where the Black Swan events (rare share market crashes) could happen at any time – it is the responses to individual events Example – Recent issues with Deutsche bank – flow-on effects for the counterparties of derivative positions – then China banks are falling over as well – even enough of these occur the market adapts – not just to dumping DBK shares but everything out of fear Complex adaptive systems are special as they have the capacity to change and learn from experience - share market Occurs in any human group-based endeavour – inflows and outflows of the market Feedback loops - Feedback occurs when outputs of a system are routed back as inputs as part of a chain of cause-and-effect that forms a circuit or loop - The system feeds back into itself The notion of cause-and-effect has to be handled carefully when applied to feedback systems: Cause – people acting out of self-interest – to make the most money in the markets or to avoid losses Effect – prices go up, go down, or stay the same – depends on the size/magnitude Simple causal reasoning about a feedback system is difficult because the first system influences the second and the second system influences the first, leading to a circular argument. This makes reasoning based upon cause and effect tricky, and it is necessary to analyse the system as a whole. Chicken or the egg – what one thing causes a share market panic? There isn’t one – it is a feedback of negative or positive information – news, price signals, deleveraging – eventually the feedback compounds and becomes a market panic ETFs are an example of a feedback loop – people buy index funds – prices go up – so more people buy index funds – driving the prices up Market trends are their own feedback loop – either a positive or negative reward from a decision will reinforce the behaviours Happens in everyday life – not touching a hot pan is a feedback loop – pan is hot, touch it, get burnt, learn not to do it again Summary – Share markets have a tendency of a complex system – due to characteristics – which are all connected Nonlinear – nonlinear system is a system in which the change of the output is not proportional to the change of the input – Something linear = add $100 to your bank account, have $100 in your account = then earn 2% interest = $2 return Emergence - occurs when an entity is observed to have properties its parts do not have on their own – therefore the behaviours only emerge when the parts interact in a wider whole Spontaneous order - Spontaneous order in financial markets can be seen in herd behaviour - group of individuals coordinates their actions without centralised planning – everyone moving in the same direction Adaption - Adaption relates to complex systems due to the networks of interactions - the behaviour of the market is not predicted by the behaviour of the individual shares – collective versus individual holdings Feedback loops - Feedback occurs when outputs of a system are routed back as inputs as part of a chain of cause-and-effect that forms a circuit or loop This is the reason why modelling and forecasting the short-term behaviours of share markets are pretty hard if not impossible Now that the basics of complex systems are out of the way = Next ep – talk about the application to financial markets Thanks for listening, if you want to get in contact you can here: https://financeandfury.com.au/contact/
The Australian and US share markets reached all-time highs at the end of last week. This is great news for superannuation returns and existing share investors. However, where will the markets go from here?When valuations are high, future returns will be lowThere is a strong negative correlation between the starting valuation multiple (e.g. price-earnings ratio) and an investor’s subsequent 10-year investment returns. That is, if current valuations are high, future returns are likely to be low. This makes sense because if you invest in a company or market that is currently fully valued, there isn’t a lot of upside left. In fact, it could be that you are overpaying to invest in that company or market. If that is the case, you could experience capital deprecation.The US market valuations appear elevatedThe CAPE ratio is a widely accepted measure of a market’s current valuation relative to history. Currently, the US market’s CAPE ratio is over 30. The long-term average is in the range of 18 to 22, depending on the period and adjustments made. The US CAPE ratio has only been above 30 two times since 1871:in 1929 when the share market crashed nearly 25% (Black Tuesday) – the CAPR ratio was 32.5; andin December 2000 when it reached 44 during the dot-com boom. The NASDAQ-100 lost 78% of its value between 2000 and 2002 (called the Dot-Com Bubble).Am I saying that the US market will crash? No. In fact, the CAPE ratio is not a reliable indicator of short-term market movements, only long-term (10 year) returns. But this analysis does indicate that US market valuations are alleviated and as such, history tells us that future returns will likely be lower.What about Australia and rest of the world?Australia’s CAPE ratio is currently 18.4 which is above its median at 16.5. Fair value is considered to be 17.1. So, whilst the Australian market appears to be slightly overvalued, the differential isn’t as much as the US and other markets. It is important to note that most developed markets appear elevated at the moment – except for the UK and Europe.There are some headwinds to considerThere are a few headwinds that might impact future equity market returns including:The US is arguably towards the end of an economic growth cycle. Whilst the employment market is still going strong with a record low unemployment rate, jobs growth and an uptick in wage inflation, it can’t go on forever. The S&P500 index has appreciated by more than 15% per year over the past 10 years. The only question is whether the slowdown will be a soft or hard (recession) landing?The RBA has expressed some concerns in regard to the Australian economy namely low wage growth and subdued consumer spending. If the property market recovers, that might improve consumer confidence. But if things deteriorate, Australia might slip into recession.The UK Brexit debacle is still ongoing. In Europe, the German economy is slowing down and Italy is a basket-case (although is a relatively small economy).What has driven past growth in the US?The large tech companies are responsible for driving a lot of share market returns in the US over the past decade. As illustrated below, the aggregate value of the FANMAG (Facebook, Apple, Netflix, Microsoft, Amazon, & Google) companies is now circa $US3.4 trillion. Except for the US and Japan, that is more than the entire value of other developed country share markets! Some of these tech companies are trading at very lofty valuations e.g. Netflix’s PE is 139 and Amazon is 82! Tech company valuations are rarely underpinned by fundamentals. For example, Uber’s current market value is $US83 billion – that is similar to BHP’s value – except that BHP makes over $AUD10 billion profit per year whereas Uber doesn’t many any profit!Chart: https://www.prosolution.com.au/wp-content/uploads/2019/07/FANMAG.png?189db0&189db0The answer: focus on qualityThe table below sets out the expected components of overall expected future investment returns in the next 10 years. As noted, the drag created by currently high valuations may have a significant impact on returns – particularly in the US.Table: https://www.prosolution.com.au/share-market-expectations/The best way to mitigate this is to use a value investing approach. Economist, Ben Graham is regarded as the father of value investing and taught Warren Buffett at university. Buffett practices much of what he learnt from Ben Graham.The core tenant of value investing is to invest in companies and markets that look cheap relative to your assessment of intrinsic value. For example, a value investor wouldn’t invest (or would significantly reduce their investment) in stocks such as Amazon, Netflix and Uber.The chart below (courtesy of Schroders) compares the performance of value versus growth strategies between 1936 and 2018. It shows the value has under-performed for the past 6 years. For example, I regard Roger Montgomery as Australia’s best active fund manager (even though I’m an active fund management non-believer) and his firm has under-performed over the past 5 years too!Chart: https://www.prosolution.com.au/wp-content/uploads/2019/07/Fama-French.png?189db0&189db0 Uber (and lots of tech companies) is a good example of why value investing has under-performed. The market hasn’t rewarded companies based on fundamentals. As Buffett says, the stock market is a popularity contest in the short term. Tech has been very ‘popular’ and the current high valuations reflect that popularity. If history is anything to go by, that won’t continue forever. History tells us that the market will “correct” and valuations will be re-weighted according to fundamentals – which is effectively what happened in the early 2000’s.Use a combination of growth and value index strategiesThe best way to protect your investments from the risk of a market valuation correction is to use a combination of index (passive) strategies. Traditional market cap indexing is more akin to a growth strategy and as such, has performed well over the past 5 to 10 years. Alternative strategies such as fundamental indexing and dimensional are value strategies and have under-performed recently – see this blog for more about these strategies).The best thing to do is use a combination of strategies. However, research demonstrates that most investors are typically too late to make this change and miss a lot of the returns. That is, greedy investors won’t want to switch into a lower returning strategy (i.e. value) now. Instead, they keep investing in growth stocks until the correction occurs. But that will be too late, and they will miss a lot of the potential returns. The chart below (from this study) illustrates that the dollar weighted return is circa 2% p.a. below a buy and hold strategy (this chart also highlights that growth underperforms against value).Chart: https://www.prosolution.com.au/wp-content/uploads/2019/07/late-to-party.png?189db0&189db0 Consider making the change nowThe challenge for successful investors has always been to resist what is popular and instead do what is sensible. You can’t expect to jump on the most popular approach year after year and produce quality returns in the long run (this is called “trend chasing”). It just doesn’t work. Bitcoin is a good example of this.Share investors must consider adopting a greater tilt towards a value approach now, even though recent historical performance doesn’t support such a change.
Welcome to FInance and Fury, the Furious Friday Edition. Following the series of the Lucky Country – You don’t need to have listened to the last few FF eps for this one – rare event – but will be talking about a few related factors, like GDP growth, Interest Rates, Housing – all in relation to the share market – Today – episode will be looking at how the share market is related to all of these factors Help focus on how to create a rising share market – as it has become more volatile over time, and growth has slowed What factors affect the share market? – Millions Due to the nature of a market -built up of millions of people – so millions of factors, between 10s of thousands of companies, between millions of people – why markets are almost impossible to predict day to day - First – let's start with What is the ASX – Australian Securities Exchange 2,319 listed companies, $2.21trn market cap, the average company is worth $1bn (just shy) What factors affect the market? Interest rate - What are the flow on effects – from the announcements and policy decisions Movements in the cash rate are quickly passed through to other capital market interest rates such as money market rates and bond yields - influenced by the risk tolerance of investors and preferences for holding funds in a form that are readily redeemable then feed through to the whole structure of deposit and lending rates. Share valuation – use risk-free assets – Gov 10y bond yields – but as they drop – the risk premium in relations to shares goes down – so the cost of equity declines, so does a company's weighted average cost of capital – so the returns for the share market don’t have to be as large to compete with investors’ money – then – the companies themselves don’t need to compete that much either – things become easier – as the returns they need to provide decline – so innovation goes out the window – just solidify market share and sink into GDP like returns over the long term – going to break down the top 20 companies over the past few years – This got me thinking Why did a fall in share prices lead to a collapse of GDP back in 1929 but not 2008? Confidence – people who are invested in markets (those with larger consumption capacity) stop spending Housing – peoples wealth is in housing as well – most Australian wealth is in housing on average 2018 Australia became the country with the largest median wealth per adult – thanks to housing This build confidence – when we feel rich, people act rich – investing or spending more – boost to economy Looking back in history Share Markets and GDP are very very related A countries GDP was close to their share market capitalisation Today – Globalisation = Global GDP to Global share market capitalisation (valuations) Free movement of capital + companies are able to list anywhere in the world (as long as meet requirements) A lot of companies chose to leave based around listing restrictions/confidence- reason Alibaba (bigger than amazon technically, thanks to dominating China market) listed in USA, not many people trust Shanghai exchange Growth of GDP with Market cap The differences in them – does it provide a sign? What Is the Stock Market Capitalization-to-GDP Ratio? - The stock market capitalization-to-GDP ratio is a ratio used to determine whether an overall market is undervalued or overvalued compared to a historical average. The ratio can be used to focus on specific markets, such as the U.S. market, or it can be applied to the global market, depending on what values are used in the calculation. It is calculated simply as stock market cap divided by gross domestic product. Typically, a result that is greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. If the valuation ratio falls between 50 and 75%, the market can be said to be modestly undervalued. Also, the market may be fair valued if the ratio falls between 75 and 90%, and modestly overvalued if it falls within the range of 90 and 115%. In recent years, however, determining what percentage level is accurate in showing undervaluation and overvaluation has been hotly debated, given that the ratio has been trending higher over a long period of time. The market cap to global GDP ratio can also be calculated instead of the ratio for a specific market. The World Bank releases data annually on the Stock Market Capitalization to GDP for World which was 55.2% at the end of 2015. This market cap to GDP ratio is impacted by trends in initial public offerings (IPOs) and the percentage of companies that are publicly traded compared to those that are private. All else being equal, if there was a large increase in the percentage of companies that are public vs. private, the market cap to GDP ratio would go up, even though nothing has changed from a valuation perspective. Where is Aus At – 115% Where is US at – 141% - one of most innovated market – valued at expected Switzerland – 248% Australia is fairly unique – concentration - ASX300 vs ASX20 – breakdown over 10 years Growth (excluding dividends) ASX20 – 48% gain – 4.4% annualised ASX300 – 58% gain – 5.2% annualised Dividends – ASX20 – 6.26%, ASX300 – 4.2% PE – reflects the price to earnings – shows the price based on people expectations for future cashflow (large=big FCF) ASX20 – 17.96, ASX300 – 16.29 Summary – Top 20 are Cash cows – don’t get much growth, but have better dividends - Top 20 have limited growth potential – but the lower market caps – rely on new companies listing Requires innovation and entrepreneurs - Human innovation always beats fear – we just need confidence in the system How to create a rising share market More companies = more market goes up Better companies are doing (in value add) – more market goes up Need policies to help AUS market increase number of companies doing well – Low taxes, low regulations, highly competitive in the global economy Low barrier to entry Cultural as well – innovation and number of small companies being started – and allowed to grow A nation of problem solvers – nobody starts a company unless for two reasons Think they can offer product or service at a lower price (while at profit), or Think they can offer a better good/service – something market isn’t doing already A lot of the ASX gains are from new businesses - the value gain comes from the bottom of the market – – but when weighted by market cap –the cash cows provide the largest returns from dividend – due to concentration from the top – these have a large weight on the success of our market Distortion in the market – returns look the same, but most of it comes from cash returns to investors – not at growth Isn’t anything wrong with this – as long as you reinvest the funds. Have ASX listings gone down in line with ASX average returns What's the criteria for listing on the ASX? – IPO process The minimum admission criteria require a company to meet three things: Number of Shareholders - minimum of 300 non-affiliated investors at $2,000 AUD each. Free Float - 20% or greater of the company is on offer Company Size - The company must meet one of three criteria: $1m AUD aggregated profit from continuing operations over past 3 years + A$500,000 consolidated profit from continuing operations over the last 12 months. $4m AUD net tangible assets $15m AUD market capitalisation Need innovation not easy credit Just helps existing business when lending is increased - How can we avoid going into a Recession? Are we making the same mistakes? Is a recession inevitable due to making the same mistakes? Tax cuts help markets – companies want to operate in the zone that has lowest rates of tax, plus provides more confidence to investors If you liked this episode and want to get in contact, you can do so by clicking here.
Welcome to Finance & Fury’s Furious Fridays… This week we continue looking at the EU. If you didn’t catch last week’s episode, you might want to check it out here. It explains what the EU is, and what their role in Europe actually looks like. This week we dive a little deeper and look at the two issues faced by the countries who are considering leaving the EU - Loss of sovereignty & Immigration. Loss of sovereignty A lot of nations (Hungary, Czech Republic, Slovakia, Poland) lived under brutal authoritarian governments – for most of the 20th They swapped Nazi rule, for Soviet rule and now the EU rule The Internet Censorship Bill is a great example of loss of sovereignty Article 13 – the new Copyright Directive involves the creation of a crowdsourced database of "copyrighted works". Platforms such as FB, Youtube etc must take this into account and block “copyrighted works” from being posted on their sites. Billions of people around the world will be able to submit anythingto the blacklists There is no onus to prove you actually hold the copyright, and no punishment for false submissions Article 11 simply gives publishers the right to ask for paid licenses when their news stories are shared on online platforms. This would destroy FB and Youtube. Good or not – this is where a lot of people get their information, updates about current events and news. It’s all shared content. The thing that was the turning point for most was realising how little Sovereignty they have when considering the current immigration crisis There are two complicated issues – The Schengen Agreement and The Dublin Regulations These will probably cause the downfall of the EU Schengen Agreement- border checks on internal borders (i.e. between member states) are abolished Restricted border checks to external borders only – Meaning free travel for anyone inside the EU Some nations aren’t a part of it – UK still has customs, even on the train between France and the UK Almost the same as moving from QLD to NSW to Vic The Dublin Regulation- the EU member country that an immigrant first reaches MUST process the asylum application Prevents asylum applicants in the EU from "asylum shopping" – moving to the country of their choice, typically the country that will provide better welfare. This wasn’t well enforced until 2016, but now it’s placing too much responsibility on the member states on the EU's external borders – Italy, Greece and Hungary – who receive the most immigrants on their doorsteps. Italy – boats from Africa, Hungary and Greece – Turkey Spain – from Morocco The new proposal would introduce a "centralized automated system" to record the number of asylum applications across the EU and presents a "reference key" based on a Member State's GDP and population size. The country is essentially given a quota of how many migrants they have to accept. The populations of the country have no say on immigration policies If a Member State chooses not to accept the asylum seekers – it will have to contribute $250,000 per application as a "solidarity contribution". This got me thinking – that is a LOT of money per person – especially given the narrative that there is massive “economic benefit” in migration So, what are the economic effects of migration? There are two sides to the coin, and it all depends on who is moving where. Immigration – the words is now used as a collective term for both legal and illegal migrants entering a country, including refugees. The “Sending” countries experience both good and bad effects off emigration. “Brain Drain” - the loss of trained and educated individuals to emigration – This is generally through legal immigration. Currently more African scientists and engineers working in the U.S. than there are in all of Africa, according to the International Organization for Migration (IOM). Africa only retains 1.3% of the world’s health care practitioners – UN Population Fund 2006 With almost 17% of the world’s population and 64% of the population with HIV/AIDs Remittances - funds that emigrants earn abroad and send back to their home countries Estimates at $530bn in 2012 Money leaving the shores of a country reducing the multiplier effect in the nation the money is being sent from because it’s not money that will be spent in that nation. Might have small currency pressures, and also props up the sending country with higher spending The “Receiving” countries Population growth is heightened – More people buying things, and paying taxes (that is, for the portion of immigrants who are working) This helps to address skills shortages but may also decrease domestic wages This can also add to public burden (though this is negligible for skilled migration) There are a lot of hidden costs of immigration; Welfare, Education, Healthcare, Infrastructure, Housing Increases unrest and economic inequality CIS study concluded that, “immigration has dramatically increased the size of the nation’s low-income population” Disparities between immigrants in Germany and native Germans; 49% of non-Germans falling below the poverty line compared to 23% of original native citizens. This is due to immigrants being less likely to be employed – 81% for natives to 66% of non-Germans. “The consequences are segregation, housing problems and divided cities” (Traynor, 2010) Who does this benefit? Migrant workers often fill low-wage jobs as supply of labour (e.g. agricultural and service sectors). Helps to lower costs for big companies and increase supply of labour at a greater rate than demand for labour …which of course means lower wage growth. For example: Why do celebs want to open borders in the US? Who else will clean their 12-bedroom mansions (ironically, they don’t let refugees stay with them) inside giant walls of their own. Economic effects – Doesn’t tell a good story Netherlands: Each Muslim migrant costs $1,150,000 in total over their lifetime Germany: Total migrant cost was $86bn over 4 years. This equates to 12 Germans needing to work to pay taxes for 1 migrant Italy: Spent $4.2bn on migrants in 2017 (about one seventh of Italy’s budget) UK: $120bn pounds over 17 years Sweden: $18.6bn in costs for migrants in 2017 (19% of their Government budget, and 3.2% of GDP) 60k Euro is spent per migrant per year, whilst the average Swedish household income is only 29k Euro. Let that sink in. The real world effects It comes back to legal immigration vs illegal/refugee intake. There is a massive distinction. In 2015 the EU had 1.8m illegal immigrants in the one year Accepting a massive number of refugees compared to rest of world US: 38k refugees per annum Australia: 18k refugees per annum Italy: 150k refugees per annum Sweden: 160k refugees per annum (2% of their population) You hear in the media it is a “refugee crisis” but in reality, it is economic migration. A recent report showed that the reality is only 1 in 5 are coming from a ‘war zone’. Estimates at over 8m people have migrated to the EU in the past 6 years, with a staggering 75% being young men – not woman and children like you see in the media. System was broken – 65% of child refugees were actually found out to be adults. This number is even worse in Sweden at 85%. This really hurts the sending countries – there’s now slavery again in Libya through human trafficking. 78% of EU citizens want tighter control over borders and immigration. Beyond economics – the current state of the EU Remember, these are the statistics; simply reality and the facts. The UK leaving the EU because the people feel the damage is already done Most common boys name is now Mohammed (or one of its variants) In London the white British people are a minority, Savile Town has 1% white: 48 out of 4,050 Unfortunately, it has created a clash of cultures The UK is the acid attack capital of the world – there were 77 in 2012, and 465 in 2017 Grooming gangs with underage girls (Oxford, Rotherham, Rochdale, Newcastle, the list goes on) has been going on for over 10 years. Not going to go into details but look it up, but be warned if you start to research this yourself. It’s horrific. Sweden In 2015 Sweden took in almost 180k refugees (2% of their population) This caused unrest (putting it lightly) Arson attacks – 100 cars were burned in a coordinated attack a few months ago Back in 2016 – 40 hand grenade attacks – more recently on cop stations as well “No go” zones (this has been rebranded to “Vulnerable Areas”) There were 61 ‘no go zones’ in 2017 – 23 were ‘especially vulnerable’ This is just rebranding. Whilst it’s technically true that you can still go to these places you might end up like the reporters who have gone there. Not. Good. Sanandaji Has been a sharp increase in welfare payments, 60 percent of which go to immigrants Sweden expects to spend about 7 percent of its $100 billion budget next year on refugees – double what was spent in 2015 Only 25 percent of Somali refugees (age 25–64) were employed in the formal economy in 2010 This brings us back to the EU motto from last Furious Friday episode; “United in Diversity”…but how well is that working? There is a massive difference between Racial and Cultural diversity. Race means nothing, everyone should be treated the same Culture is the cohesion that keeps a country together and the ability to communicate and cooperate, with everyone playing by the same rules, building towards the same thing, is what keeps a country together. It’s like building a house – What happens if the carpenter, tiler, builder, architect all have their own ideas about what it should look like? What if they don’t pay attention to the plans and try to make it how they want it? The EU population is annoyed as their figurative houses are falling down. And, they have little say when it comes to this. There is a difference between legal and illegal immigration, and refugee/asylum migration. One has been selected to come in and one hasn’t. It’s hard to conceptualise at the global level. But here’s a question: do you lock your doors? Or have a fence around your place? Why? To protect yourself, family or stuff from other people/strangers. A Government has one role – look after the interest of its citizens. Almost all the time that is achieved through good relationships between countries and peace. Immigration policy is the same thing as locking your doors at night, or conversely, leaving them open for anyone to come in. History of migration Nations were built on immigrants? Very true – key word her is ‘were’. Migration has changed. In the old days it was in reverse – People from Italy, Ireland, Greece, England were moving to places that were harder to live in than their homelands - were going to make something for themselves. Flow of migration was from richest parts of the world to the poorest Where would you have rather lived – London or Australia – in 1788? Compared to today, both options don’t look great. But back then London was one of the better places to live in the world. Things were hard: for example, almost half of the original colonists in the US starved in the first few years. But thanks to socialist policies once they were given property rights things took off. Today the opposite is occurring. Major net migration has reversed over the past 200 years. I am all for immigration, but not if it hurts the local population or if it hurts the immigrants (think people smuggling, slavery, human trafficking, and the dangers of actually getting themselves to the new country). Imagine that you move to Syria, Afghanistan, Iraq. How hard would it be to integrate? Language, culture, etc. Naturally most would isolate themselves and want things to be like home. I wouldn’t dare move to another country and try and make it like Australia – what is the point then of moving? Anyone who wants to have a Socialist government can move to Venezuela – the UN released a report showing 3m people have left their due to their socialist economy. In Summary – We’re looking at Death by Demographics Bringing these facts to bear – Not only is this restricting economic growth of the EU, it is costing more through migration We’re finishing up this topic next Friday by looking at the flow on effects of the EU breaking up; on the Share Markets, Bond markets and on economic growth. As always, if you have a question or topic you’d like to know more about, contact us at www.financeandfury.com.au/contact Here are some links to some of the information we’ve been looking at: http://www.opennetwork.net/wp-content/uploads/2016/05/Tent-Open-Refugees-Work_V13.pdf http://migrationcouncil.org.au/wp-content/uploads/2016/06/2015_EIOM.pdf https://foreignpolicy.com/2016/02/10/the-death-of-the-most-generous-nation-on-earth-sweden-syria-refugee-europe/ http://bruegel.org/2017/01/the-economic-effects-of-migration/
Are we living in an age of financial malfeasance or bolstered regulation? James and Alan debate the regulatory landscape, what Ruslan Kogan could have in store, the trajectory of global markets and Alan names his favourite funds on this week's Money Cafe podcast. See omnystudio.com/listener for privacy information.
Upfront Investor Podcast: Weekly Australian Stock Market Update | Trading and Investing Education
Here’s a story that hundreds of thousands of shar…
Here’s a story that hundreds of thousands of shareholders in BEE stocks will be very interested to hear about. The Financial Services Board of South Africa has suggested that companies operating over-the-counter platforms need to let it know by the end of July whether or not they’re going to apply for a stock exchange license. If they don’t apply for that license by January next year, they have to cease trading. Alec chats to Erris van Kerken Senior Forensic Investigator for the Directorate of Market Abuse at the Financial Services Board.
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