Trying to hear what's not being said
January 9, 2013 Leave a comment
The attached link is an interesting post that appeared on the Naked Capitalism blog.
Lazy Corporate Monopolies Are Why America Can’t Have Nice Things « naked capitalism.
December 18, 2012 Leave a comment
Below is a link to an interview broken into 3 parts on the CNBC website featuring hedge fund manager, David Tepper.
If you really, really listen, he’ll tell you a lot about investing
December 12, 2012 Leave a comment
As a contrarian investor, some of my recent observations of sentiment and price include:
November 20, 2012 Leave a comment
When investing, I think there is merit in understanding what has great demand but perhaps more importantly, where there is ample or excess supply.
Some of my recent thinking on this topic has moved away from commodities but into financial securities or instruments.
If the world has so much government debt on issue, why would you want to own something that is so abundant? Yet bonds are being bought and sought and prices continue to rise.
Inversely, the supply of equities continue to shrink, driven by mergers, stock consolidation, lack of new issues and growing amounts of share buy-backs.
The growth of share buy-backs has been occurring by stealth. Many companies are choosing to buy their own shares back with their excess cash, for reasons that I can’t see as positive.
Perhaps this means management from a particular company can’t find appropriate investments or they are cautious about deploying more capital into their existing business, but either way, it improves a company’s “earnings per share” data. This in turn helps executives meet share performance data tied into their compensation.
In fact, with money so cheap, it’s actually accretive to borrow money and buy your shares back.
Putting manipulation aside, there is a shrinking supply of equity and especially in Australia where the amount of amount of excellent companies with high quality of earnings are diminishing.
This is a positive, for that huge pool of superannuation money in Australia will only ever invest within its own shores.
October 27, 2012 Leave a comment
Did you know that over the past 6 weeks, the spot price of Iron Ore has risen 33% back to $120 per tonne?
Some investors may not believe this as they are still anchored to the bad news they saw last month with headlines such as ‘Iron Ore Prices Plummet”.
Credit to London’s Financial Times who did report the positive news this week.
source: Bloomberg
October 14, 2012 Leave a comment
The increasing supply of oil and natural gas needs to translate into lower energy prices at the consumer level, in order for any cyclical upturn in economic activity and asset prices. I’m not sure how much of the current price factors in the Syrian rebellion and Iranian sanctions but it’s difficult to believe that Brent is trading at $115 considering all of the persistent weak economic news.
It would advisable for producers of thick tar sand oil (such as Canada and Venezuela) to ramp up extraction before it becomes uneconomic. With Chavez’s recent re-election and PSVDA’s recent disruptions, along with Canada’s trade deficit under pressure due to falling metal commodity prices it is plausible that this will happen.
Further to a recent post where I refer to lower oil prices into the end of the decade, below is an extract of a news story sourced from Bloomberg referencing recent comments from the International Energy Agency (IEA).
“The IEA suggests oil demand is basically going to be unchanged and that’s not going to lend support to the market,” said Gene McGillian, an analyst and broker at Tradition Energy inStamford, Connecticut. “The more-than-ample supply we have here is preventing oil from breaking off.”
The Paris-based agency also said global markets will become better supplied in the next five years as demand growth slows and production rises in North America and the Middle East.
Worldwide fuel consumption is projected to rise to 95.7 million barrels a day in 2017 from 89 million last year, the IEA said. Output is forecast to advance about 1.5 million barrels a day each year to 102 million barrels a day in the same period.
October 10, 2012 Leave a comment
I hope you enjoy this interesting blog from an old friend, Mr Les Hayman.
The dictionary defines an entrepreneur as “A person who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”.
It then defines an intrepreneur as “”A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”.
But it’s not that simple.
Firstly, I do not believe that all entrepreneurs are necessarily “assertive risk takers” as the dictionary definition suggests. I accept that some are, and they will risk everything on the throw of a single die, but I believe that these are actually in the minority. Most entrepreneurs I have met are really quite risk averse, in that they will only take the risks that are necessary to create and maintain their business, but only to an acceptable level, and they will also understand when to call it quits. Some…
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October 9, 2012 Leave a comment
When it comes to investing and providing advice to my clients, living in the country offers many benefits.
It allows me to eliminate the noise of unimportant information and news. The slower lifestyle trains you to step back and observe from afar.
One of the highlights is travelling from regional Australia into metropolis Australia to meet with clients, watch crowd behaviour and spot some trends.
This week, I have seen the economy on Queensland’s Gold Coast still in the doldrums. Bank lending is low to non-existant, house prices are wallowing (many below replacement costs), vehicles are being repossessed, restaurants are empty and tourist numbers are down.
In contrast, I see the economy in Melbourne improving.
The difference between the two cities is that people on the Gold Coast seem to have such a high level of confidence and opinion of their economy, that they are in denial of their existing situation as long as their credit cards are still able to fund the charade.
People smile at you but you can tell it’s under duress.
In Melbourne, however, they’ve got their “heads down and bum up” and are getting on with it. They have absorbed the economic pain of the past couple years and are beavering away at their work and businesses.
When they lift their head and smile, you know it’s genuine.
Overconfidence can be dangerous to your financial health!
September 24, 2012 Leave a comment
September 18, 2012 1 Comment
In our little coastal hamlet town of Dunsborough in Western Australia’s south-western corner, I am noticing increased activity in homebuilding and real estate sales. As AUD borrowing rates are under 6% and cash deposits are closer to 3.5%, I started thinking that the sector may find some support.
Anecdotally, at least, electricians, plumbers and concreters are telling me that they have been steadily busy over the past couple months and quoting on a growing amount of jobs. Builders are saying that their orders books are growing and some are cautiously close to calling it a “back-log”.
Real Estate Agents have seen mere inquiries turning into written offers. Their representatives are back selling homes and I have seen many “SOLD” stickers on boards outside houses as I drive around.
This prompted me to make some calls to friends in the Eastern cities of Melbourne & Sydney to ask about their property observations, which have also turned out to be positive.
When questioned about the prices some of the houses were selling for, the answer has been similar. The vendors have tempered their expectations by meeting the market, buyers have stopped placing bids at ridiculous “fire-sale” levels and the prices achieved seem to be closer towards the 60%-70% level of the sellers original wish, which seemed to be “anchored” to prices seen 5 years ago.
I can’t say if property is cheap or if the prices are fair, but it does tell me that confidence is returning. Often that is a recipe, in order to “make a market” in the first place!
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