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Avoiding Emotional investing, Volatility & Long Term Equity

  • Willard Lloyd
  • July 28, 2020
Reading Time: 3 minutes

A few key points to take in mid-week:

 

  • Avoid emotional investing – selling aftermarket declines or attempting to time the market risks missing the best returns.
  • Volatility is a normal part of achieving investment returns – drawdowns are common on the path to long-term growth
  • Understand long term equity returns are quite stable at around 8-10% p.a.
  • Use the only free lunch in investing – diversification – to smooth out the investment return ride

Musk Roars Past Buffett. Here’s Why It Matters…

  • Willard Lloyd
  • July 13, 2020
Reading Time: 4 minutes

On Friday Elon Musk just shot past legendary investor Warren Buffett to claim the seventh place on the world’s rich list.

As you’d guess, the top 10 is dominated by tech moguls.

Amazon’s Jeff Bezos remains in poll position looking set to become the world’s first trillionaire. Facebook founder Mark Zuckerberg, Google founder Larry Page, and Microsoft CEO Steve Ballmer are all up there too.

Musk’s ascendency of late was all due to Tesla’s rampant share price which continued to defy the critics.

Why the Government May Be Behind Afterpay’s Incredible Rally

  • Willard Lloyd
  • July 3, 2020
Reading Time: 4 minutes

Afterpay is now the face of Australian tech…new generation, new rules…young, dumb, and out of money…and more…

It’s pretty clear who the biggest winner of 2020 has been thus far…

Afterpay.

 

The buy now, pay later phenomenon has come a long way this year. Defying plenty of odds and doubters to become a true sensation.

From their $8.90 low on 23 March, the stock has roared with a vengeance to $75.34 (21 July). Bringing it ever closer to becoming one of Australia’s top 20 companies by valuation.

Easily the most prolific and talked about success stories of this whole pandemic.

Is the stock market rebound overdone?

  • Willard Lloyd
  • June 30, 2020
Reading Time: 6 minutes

There is no definitive answer, but here are three things to consider before you invest, writes Morningstar’s Daniel Needham.

We’ve heard questions from many clients about why the market is doing so well right now given how bad the economy is, and whether we will see the lows of March 2020 retested.

They’re good questions, but there might not be clear-cut answers for those who want certainty. We’ll discuss three points embedded in investors’ questions.

Key takeaways

  • Markets are unpredictable, especially in the short term. This means we should be prepared to see many different outcomes, including what we’ve seen in recent months.
  • Markets predict the economy, not the other way around. Don’t expect the economy to improve because the stock market has risen.
  • What is a market? An index’s performance can hide the idiosyncrasies of underlying sectors and types of stocks.
  • In our view, stocks that have fallen more or recovered less often have greater potential for future gains.

The most amazing investing lesson of all

  • Willard Lloyd
  • June 26, 2020
Reading Time: 8 minutes

Compounding can produce astounding results. Take the Berkshire Hathaway Annual Letter that Warren Buffett writes. His latest shows a 20.3% annual compound return between 1965 and 2019. Impressive, especially versus the S&P500 return of 10%.

But here’s the punchline. That 20.3% is a 2,744,062% overall gain. Or put another way, $100 invested with Buffett for 55 years would now be worth $2.75 million.

An unwritten rule for every article about compounding is that the author must state that Albert Einstein described compound interest as “the eighth wonder of the world”.

Trouble is, despite the internet carrying thousands of memes on the phrase, there is no evidence he ever said it. Economist Don Stammer once told me he had spent days trying to find an original and accurate source of the quote without success. Never mind, fake news, but it sounds good.

The vibe of future returns: tell ‘em they’re dreamin’

Reading Time: 6 minutes

In the iconic Australian film, The Castle, the family lawyer, Dennis Denuto, is struggling to make his case in court, bumbling around with a copy of the Australian Constitution. Finally, he sums up in a segment that has both entered Australian folklore and become required viewing for law students:

“It’s the vibe of it … It’s the Constitution. It’s Mabo. It’s justice. It’s law. It’s the vibe and … ah, no, that’s it. It’s the vibe. I rest my case.”

Six simple charts on what to expect from shares

Reading Time: 4 minutes

In our recent Reader Survey, about 40% of respondents reported portfolio losses of over 20% between January and March 2020, although the market rise since the lows has pared back some of the pain. Anyone relying on their investments to fund regular spending will not only be concerned about the loss in capital value, but also the reductions in dividends. National Bank has lowered its interim dividend from 83 cents to 30 cents and ANZ Bank has cancelled it completely in a sector which traditionally provides one-third of all dividends in the listed market.

The Battle for Consumer Attention

Reading Time: 4 minutes

By Baillie Gifford, the investment manager of the Vanguard Active Global Growth Fund

Baillie Gifford’s Research Agenda, which is updated annually, provides a framework to help guide the hunt for unrecognised growth opportunities and where the existing portfolio requires the greatest scrutiny to keep the portfolio fresh and full of future potential. In 2020, companies offering digital services to consumers are on this agenda.