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15 Feb 2018 (AFR) – ‘Everything looks expensive’: Morningstar’s Daniel Needham

(15 February 2018, AFR, p29, by Sally Patten) ‘Some investors might be dipping their toes back into the sharemarket after last week’s rout, but Morningstar isn’t one of them. The high-profile manager is sitting on a hefty pile of cash and has not begun to deploy any of it, despite the recent falls. “Valuations are … Continue reading

12 Feb 2018 (AFR) – Volatility bets should not be available to retail investors

(12 February 2018, AFR, p19, by John Authers) ‘How much protection do people deserve when they venture into markets? After the longest period on record without a stock market sell-off — or “correction” — capital markets reminded last week that setting prices is painful. It involves the interaction of greed and fear, with markets rising steadily, … Continue reading

12 Feb 2018 (AFR) – ETF market smashes through $US5tn barrier after record month

(12 February 2018, AFR, p19, by Chris Flood) ‘Investors ploughed more than $US100bn in new cash into exchange traded funds in January, a record monthly inflow that helped drive assets held in ETFs globally above the $5tn mark for the first time. The surge in January follows four consecutive years of record breaking inflows into … Continue reading

12 Feb 2018 (AFR) – Stock market nose dive: ‘This is how QE ends’ – AXA Framlington’s Mark Tinker sees structured product rethink after VIX blow-ups

(12 February 2018, AFR, p13, by Sarah Turner) ‘AXA Framlington’s Mark Tinker says he wasn’t surprised by the role that shorting volatility played in the last week’s stock market rout as he took aim at the wave of structured financial products that have emerged since the global financial crisis. The $US2 billion VelocityShares Daily Inverse … Continue reading

12 Feb 2018 (TheAge) – ‘We knew something was coming’: The day markets rediscovered fear

(12 February 2018, The  Age, Business, p24, By Tom Rees and Tim Wallace) ‘ “We knew something was coming,” recalls a city trader about a tetchy dealing room in London hours before the Dow Jones suffered its biggest one-day points fall in history. “There was an eerie feeling to trading, it felt very wobbly.” “There … Continue reading

9 Feb 2018 (AFR) – Millennials get a lesson in turmoil – Market unwind will be turbulent, says ‘bond king’ Jeffrey Gundlach

(9 February 2018, AFR, p32, by Karen Maley) ‘It’s been a tough year for Millennials who, for the first time in their investing careers, have learnt just how vicious markets can be. The first market lesson came from the Millennials’ market darling – the cryptocurrencies. After soaring to a peak of nearly $US20,000 ($26,600) per coin … Continue reading

9 Feb 2018 (AFR) – Surge in volatility – ‘Buy the dip’ mantra faces unexpected test

(9 February 2018, AFR, p29, by Nicole Bullock and Eric Platt) ‘It took less than a day to debunk the longstanding mantra that financial markets are in an era of low volatility. As the shockwaves ripple out from this week’s ructions, another truism of recent years — that investors should “buy the dip” — faces … Continue reading

8 Feb 2018 (AFR) – The role of volatility shorts in this week’s market sell-off

(8 February 2018, AFR, p27, by Robin Wigglesworth) ‘When excitable beliefs in new paradigms in markets are shattered it can be spectacular. The conviction that stock markets had entered a new era of tranquility has become the latest example.’ <snipped…> ‘On Wall Street, being “short” means you are betting against something, and “short volatility” is … Continue reading

7 Feb 2018 (AFR) – Why defensive stocks may not save your bacon

(7 February 2018, AFR, p26, by Debra Cleveland) ‘If you thought you’d find shelter from volatile markets in classic defensive stocks, rising interest rates may have undermined your “insurance policy”. High-yield defensives like the telcos, infrastructure plays and real estate investment trusts (REITS) have done well over many years, says Shane Oliver, head of investment … Continue reading

7 Feb 2018 (AFR) – Wall St’s VelocityShares ETF crashes 80 per cent as volatility strikes back

[COMMENT: Here is one good example of the sorts of things that can catch the uninitiated and unwary when playing in the financial markets.] (7 February 2018, AFR, p25, by Patrick Commins) ‘The rapid unwinding of complacent markets may have claimed its first victim after a Wall St exchange-traded fund which gains from falling volatility crashed … Continue reading

6 Feb 2018 (AFR) – Worst day in seven months for ASX pierces euphoric mood

(6 February 2018, AFR, p1, by Vesna Poljak) ‘Australian shares have had their worst day in seven months after the global bond market’s sell-off hit the ASX, leading some investors to speculate that the bull run in global equities has been shattered. Monday’s 95 point fall, a drop of 1.55 per cent, to 6026 points … Continue reading

3 Feb 2018 (AFR) – Seeds of doubt in Quintis forestry trail

[COMMENT: An interesting insight into some of the things that might go wrong for investors.] (3 February 2018, AFR, p27, by Vesna Poljak) ‘Missteps bedevilled the timber project developer. “The long and short of it is that forestry assets take time to mature, which requires capital, which, in turn, requires trust. With trust gone, the … Continue reading

24 Jan 2018 (AFR) – Signs the ETF party is starting to sour

(24 January 2018, AFR, p24, by Rachel Evans) ‘Welcome to the big leagues, ETFs. With trillions of dollars now being held in thousands of different products, exchange-traded funds have gone from a sideshow of the financial world to the centre stage. No where is this more apparent than at this week’s annual schmooze-fest in Hollywood, Florida, called … Continue reading

24 Jan 2018 (AFR) – The share price will get there in the end – Because the share price knows best

[COMMENT: This article provides an interesting insight. Some market participants think like this (described below), while many do not. Some people would even say this line of thinking is speculation – investing on an opinion which might be little more than gut-feeling.] (24 January 2018, AFR, p23, by Elio D’Amato) ‘There is a common belief … Continue reading

24 Jan 2018 (AFR) – Manufacturing and construction sectors set to be winners in 2018

(24 January 2018, AFR, p22, by Paul Taylor) ‘As the benchmark S&P/ASX 200 continues its upward march in 2018, it is worth a brief look back at 2017. Last year the local market delivered strong returns despite considerable headwinds. Global political instability, rising US interest rates, increasing levels of government intervention and subdued GDP growth … Continue reading

23 Jan 2018 (AFR) – US hedge fund Glaucus blasts tax breaks for MIS after Quintis joins failures

(23 January 2018, AFR, p13, by Vesna Poljak) ‘The hedge fund that brought down listed sandalwood grower Quintis has urged Australian policymakers to rethink tax incentives for managed investment scheme investors after the former TFS Corp became the latest failure in a long line of forestry-linked collapses. Quintis appointed administrators on Saturday, ending a months-long … Continue reading

19 Jan 2018 (AFR) – Carillion shows ‘dumb money’ knows no borders

[COMMENT: This is a very informative article about some of the financial instruments that have been created and peddled, and which might produce large-scale problems.] (19 January 2018, AFR, p28, by Patrick Jenkins) ‘There will be many victims of Carillion’s collapse — from the British infrastructure specialist’s workers and pensioners to UK taxpayers, who may end … Continue reading

17 Jan 2018 (AFR) – ASX starts 2018 where it ended 2017: at the bottom

(17 January 2018, AFR, p28, by Patrick Commins) ‘Here we go again. Early days, I know, but already in 2018 we are witnessing an extension of a last year’s clear trend: the relatively poor performance of Aussie equities against their overseas counterparts. Since the turn of the year the global equity rally has rolled on … Continue reading

16 Jan 2018 (AFR) – JB Hi-Fi caught in a big short – Ellerston Capital’s Ashok Jacob backs JB Hi-Fi against Amazon

[COMMENT: This is something that many investors don’t hear much about – the big business and ramifications of stock shorting. And this helps to explain what happens when parties have different opinions about the perceived inherent value of a company’s shares. Read about short selling at ASX.com.au. You can also see a list of shorted … Continue reading

13 Jan 2018 (AFR) – Australian shares end downbeat week with marginal gains

(13 January 2018, AFR, p27, by Sarah Turner) ‘Australian shares ended with slight gains on Friday but lost ground over the week, with an advance in the mining sector not enough to offset weakness in consumer staples and real estate stocks. The S&P/ASX 200 index rose 2 points, or less than 0.1 per cent, to … Continue reading

12 Jan 2018 (AFR) – UK pension funds sell down stocks on market bubble warning

(12 January 2018, AFR, p28, by Sarah Jones) ‘If the basic tenet of investing is knowing when to buy and sell, the stock market boom has taken that decision out of the hands of some money managers. The $US2.9 trillion British pension fund industry is yanking money at an accelerated pace as company valuations forge … Continue reading

11 Jan 2018 (AFR) – How long can this share market boom last? – It’s all about the psychology

(11 January 2018, AFR, p28, by Karen Maley) ‘As investors try to work out how long this stunning share market rally can possibly last, would they be better off consulting the history books, or even leafing through the annals of psychology, rather than listening to economists? The question occurred to me as I read the … Continue reading

5 Jan 2018 (AFR) – Investing in popular stocks may not be a sensible strategy; Auscap’s Carleton on the hidden dangers of comfortable investing

(5 January 2018, AFR, p27, by Tim Carleton) ‘Investing in the most widely held stocks in the Australian market is often viewed as a low-risk approach to investing. By the very nature of these companies, they are well known, very large and typically well-capitalised businesses.’ <snipped…> ‘Analysis of the Australian market makes clear that it … Continue reading

4 Jan 2018 (AFR) – HFT: The high-frequency trading bonanza is over. Here’s why.

(4 January 2018, AFR, p24, by Gregory Meyer, Nicole Bullock and Joe Rennison, Financial Times) ‘… The rise of HFT means that ordinary investors buying or selling stocks, bonds, exchange traded funds or futures are likely to be transacting with an algorithm on the other side. But the bonanza has now ended. Trading firms are … Continue reading

2 Jan 2018 (AFR) – Last year’s losers, this year’s stars? – Why one of 2017’s ASX dogs will howl in 2018

[COMMENT: This is an interesting insight into some real life studies of the “Dogs of the Dow” approach and the Australian share market.] (2 January 2018, AFR, p30, by James Thomson) ‘Could sifting through this year’s ASX 100 dogs unearth next year’s gems? That’s the question posed by Hugh Dive from Atlas Funds Management, who … Continue reading

2 Jan 2018 (AFR) – Back miners, beware inflation: Leading equity strategists talk 2018

[COMMENT: It’s that time of year when the experts trot out their predictions for the year ahead. In this case, the AFR has polled a number of “experts”, and their own opinions are included in this article. They cannot all be correct. Will any of them be close when the end of year arrives?] (2 … Continue reading

2 Jan 2018 (AFR) – Inflation the big risk to ASX in 2018

[COMMENT: I still don’t understand how this sort of information can be useful to retail investors. Perhaps it is interesting reading, or perhaps it is useful to some people.] (2 January 2018, AFR, p13, by:James Thomson, Patrick Commins) ‘Investors may be too complacent about the risks flowing from rising inflation, with Australia’s top equity strategists … Continue reading

2 Jan 2018 (AFR) – Super fund returns outpace property

[COMMENT: I cannot believe that this news story made it onto page 1 of the AFR. The reporting of fund performance over a specific time period is fraught with danger. The industry does this, the fund managers do this, and the analysts do this. But in reality, the average retail investor should not be confused … Continue reading

22 Dec 2017 (AFR) – Lesson for investors: don’t count just on market returns to boost your portfolio

[COMMENT: This article touches on some of the cognitive biases that can play havoc with the way that investors think, and which influence investment decision making. It is very useful for investors to understand much more about cognitive biases.] (22 December 2017, AFR, p49, by Patrick Commins) ‘The year 2017 for investors is one of … Continue reading

19 Dec 2017 (AFR) – Aconex deal a nightmare for short sellers

[COMMENT: Thinking of “short selling”? Here is some really good information about what can go wrong, and how it’s possible to lose more than your shirt.] (19 December 2017, AFR, p29, by Philip Baker) ‘It’s impossible to go past the surprise takeover as the best way to spoil any short sellers party. For them, it’s … Continue reading

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