Information about ‘Investment strategy’

Share market volatility in the past few weeks has renewed uncertainty — even gloom — and diminished investors’ taste for risk. There’s European public debt and Chinese economic tightening worries, along with regulatory action against US and European banks. Concerns around Australia’s planned ‘resource super profits tax’ haven’t helped the impact on our shares and dollar either. While none of this sounds very good, here’s why it’s probably not a bear market — and certainly not time to throw in the investing towel. (more…)

In the middle of the biggest share market downturn in decades, investors were flocking to the tried, the true and the familiar. Small and risky was no longer beautiful. But 12 months is a long time in the financial markets. (more…)

Shares have fallen in the past couple of weeks (due mainly to tightening in China, US bank regulation and sovereign risk). But it’s no cause for despair: predications are on track for a rising trend this year — albeit a bumpy ride. Indeed it’s looking like 2004 all over again. (more…)

Sometimes it’s hard to make sense of day-to-day noise in stock prices, particularly when news is thin on the ground. But that doesn’t stop lots of people from trying to discern predictable patterns in the racket.

Building coherent narratives out of random stock price moves, often under the pressure of constant deadlines is the job of journalists and research analysts. The most successful ones make it all seem perfectly rational and predictable.

This ability to communicate the idea that ‘this happened in the market because that happened’ is most brilliantly demonstrated when circumstances change two or three times in the space of a day or two. (more…)

For those clients who have an investment portfolio managed by Summerhill Financial Services, a change is being made to the Dimensional Emerging Markets Trust, which is summarised below. (more…)

After spending last year fretting about the damage to economic growth from the global financial crisis, many investors are now worrying that policymakers’ medicine may prove too effective.

The fear is that the stimulus injected by central banks, via interest rate cuts, and by governments, via additional spending and tax reductions, will create an intractable inflationary spiral that will force interest rates sharply higher and erode the value of fixed income assets. (more…)

Standard and Poor’s (S&P) index versus active funds scorecard for the investment market has showed that benchmarks have outperformed a majority of actively managed funds and bonds over five years.

The ASX200 index has outperformed two-thirds of active Australian equity funds over the last five years, while the ASX200 has outperformed approximately half of active funds over the year to date.

The survey also found that the ASX Small Ordinaries index outperformed more than half of all active small-cap funds in the last five years, and 60 per cent of the actively managed funds over the last year.

The benchmark index for global equity outperformed more than 76 per cent of active global funds over five years.

The UBS composite bond index has outperformed more than 97 per cent of actively managed bond funds over the last five years, but only 25 per cent within the last year.

“Australian equity funds operate within a very efficient and heavily researched segment of the market, which is intensified by the fact that the Australian market is very top-heavy, with the top 20 stocks comprising 67 per cent of the market index,” said director of S&P index services Simon Karaban.

Source: Money Management

What is “equity risk premium”, or ERP, and is it enough? In this article we’ll explore both these questions, plus have a look at three factors that create confusion around the ERP concept, and why the prospective return differential that shares offer over bonds today is far more attractive than it was at the height of the last bull market in 2007. (more…)

At 6%, Australian house prices didn’t dip nearly as far as those in the USA and UK (32% and 19%, respectively) and already prices are rising again. So what happens now? And how does housing compare with other investments?

Despite fears of the big declines we’ve seen in the USA and UK, Australian house prices did not plunge dramatically - indeed the average drop remained well in single figures.

Yet, after “only” falling 6% from their early 2008 peak to the March quarter (a big enough drop for those trying to sell), house prices have begun to recovering, with Australian Bureau of Statistics’ data showing average gains of 4.2% in the June quarter, confirming rises already seen in private-sector surveys. (more…)

The Australian media and much of the financial services industry has recently been eating up acres of newsprint and clogging the airwaves with endless discussion about whether or not the domestic economy is in recession. (more…)