June 2013

Time to invest?


Gold dims

18 June 2013 | Staff reporters

Gold dimsThe boom in the gold price was a measure of the fear that investors felt about the global financial system. Most of the investment was into exchange traded funds (ETFs) and not the physical stuff. In fact, ETFs vastly exceed the size of actual gold in the world. Dr Doom economist Nouriel Roubini is now explaining what went wrong with the gold price:

Resmed Takes its Meds

27 June 2013 | Staff reporters

Resmed takes its MedsOne of industrial stocks that does offer some diversification into international markets is sleep apnea equipment maker Resmed, which is big in the US and Europe. Goldman Sachs has downgraded earnings per share for FY13-FY15 by 2%-5%. It is citing larger price cuts and softer gross margins, offset by updated impacts from new foreign exchange forecasts. 

Is AMP a Bad Sign?

24 June 2013 | Staff reporters

AMP bad sign?AMP has announced a profit downgrade that does not augur well for the overall market. The company attributed it to “poor claims and lapse” experience in its Australian wealth protection business and a lower result in wealth management. The drop in underlying profit is expected to be about $55 million below the consensus estimates of $480 million.

Small Caps Require Close Scrutiny

23 June 2013 |

Small cap scrutinyThe small cap sector can offer some good gains, but they need to be good because there is a higher danger that the companies will get into trouble. This can occur even when the revenues are solid, just because of a downturn in market sentiment, which produces a need for investors to liquidate their postions. 

Property a Magnet for Wealthy Investors

23 June 2013 | Staff reporters

Property a magnet for investorsThe self managed super sector has about $400 billion in funds, making it about a third of the pool of Australian superannuation funds of $1.3 trillion. The managers of those funds have a heavy bias towards property -- outside their SMSF, according to a survey quoted in Property Observer

Echo chamber

18 June 2013 | Staff reporters

Echo EntertainmentThe news that Echo Entertainment chief executive John Redmond is promising to invest more than $1billion to protect his casino monopoly in Sydney and "crush" James Packer’s bid to build a six-star hotel and invitation-only casino in Barangaroo should be a warning to investors.

Making Money From Traffic

17 June 2013 | Staff reporters

TrafficOne of the best defensive investments is Transurban. Taking tolls from traffic is a far more predictable revenue stream than many otyer sectors and the company has managed to avoid the debt disasters that have afflicted other toll road companies. 

The Tribulations of Metals Pricing Hit Lynas

16 June 2013 | Staff reporters

MetalsManaging a resources company means dealing with the unexpected. Lynas has had a difficult job getting approval for its Malaysian processing site. Now it has had to deal with lower prices for rare earths. The long term prospects for rare earths look sound, especially with heavy dominance by China. 

AMP: Should You Invest Your Super in a Super Company?

06 June 2013 | Staff reporters

Wealth management may be good defensiveAMP is the purest stock market play on wealth management. In particular, the raising of the super contribution from 9% to 12% will benefit the company, creating much higher inflows. The company has also achieved synergies from its merger with AXA. It has a reasonable capital position. 

Why has mining been so disappointing?

04 June 2013 | Staff reporters

Mining a disappointmentA report by Price Waterhouse Coopers (PWC) has pointed out what would have been obvious to many super investors. Mining returns have been disappointing, despite the fact that the sector is going through a once in a life time boom. In the Financial Review today.

Atlas shrugs off its funding issues but risks remain

04 June 2013 | Staff reporters

Risks remainAtlas Iron is the fourth or fifth largest listed iron ore producer and a pure iron ore play, unlike the big conglomerates. According to bank of America Merrill Lynch, "capital intensity is low and funidng has been sorted". This makes it a bit more reassuring than some others. BAML goes on:

Commodity prices under pressure

03 June 2013 | Staff reporters

Under pressureThere is further evidence that commodity prices are coming under pressure, which is likely to result in both a weaker $A and weaker Australian economy. The case to diversify out of the Australian economy is growing.


Garnaut's comments suggest it is time to look offshore

03 June 2013 | Staff reporters

Time to go offshoreThe case to invest funds offshore is growing. Respected economist Professor Ross Garnaut, who has been arguing that the Australian economy is headed for a sharp downwards correction, also expects that the $A is also likely to come off sharply.

The long grinding cycle continues

26 May 2013 | Staff reporters

Grinding Australian economyThe Australian economy has been to some extent shielded from the effects of the GFC, largely because of the country’s links with China

How To Respond to End of China Boom

27 June 2013 | Staff reporters

End of CHina boomAustralia is coming to the end of a massive investment boom in resources, which has helped the country sail through the effects of the global financial crisis. The risk now is that there will be a delayed GFC as that boom comes off. 

Global Gloom in Markets

23 June 2013 | Staff reporters

Global gloomThe stuttering of the American market is continuing, suggesting that we are a long way for a bull market internationally. The Bespoke Investment Group has this to say:

Is Australia Having a Delayed GFC and what are the Options?

06 June 2013 | Staff reporters

Australian GFC?Doing reasonably well in tough times is the hall mark of good long term investing. And there are growing indications that those tough times are coming. As mining investment cools, the skewing of the economy towards resources, so called "Dutch disease" is leaving its mark. 

What does the China Threat Mean to Australia?

06 June 2013 | Staff reporters

China threatAn article in today's Age by John Garnaut sounds an alarming tone about the future of the Chinese economy. The 35 year expansion, the greatest era of sustained wealth creation the world has ever seen, may be coming under pressure:

Is it time to sell retail stocks?

05 June 2013 | Staff reporters

Time to sell retail?The signs of recession are growing. Fund manager Robert Montgomery commented on the ABC  that the collapse of the mining services sector, which he says equates with 1.5% of the economy, could, on its own, go close to tipping Australia into recession. He reasons that even if people start talking about recession


Volatility in Super Returns

17 June 2013 | Staff reporters

Super volatilitySuper funds have lost 3.5% off returns because of weakness in the equity markets. The Financial Review is reporting that returns have been good, and, the fund managers are talking it up, saying returns are still well into double digits:

Time To Buy Equities?

16 June 2013 |

Buy equities?Broker UBS has a modestly bullish take on the local stock market. The market has fallen by over 10% in a month, the All Ords showing its customary aversion to staying over 5000. So it may be time to buy. 

Super Funds and the Traps of Trusting Experts

05 June 2013 | Staff reporters

Super trapsThe blogger Alex Dunnin had an interesting debate about Super Funds' use of external investment "specialists" . It is more confirmation of the big leap of faith that superannuants make when they do not manage the money themselves.



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