Investment & Wealth Mgmt

The US stock market is the second LEAST concentrated stock market in the world! Why all the fuss?

Alarmist commentaries allege 'concentration' in the US stock market. Nvidia has shot up to 6% of total US market value. But this is actually the second SMALLEST 'largest stock weight per country' in the world. Only Japan has a less concentrated stock market. The 5 largest US stocks comprise 22% of total US market value, but there are 20 countries where more than 22% is in just ONE stock. The 10 largest US stocks comprise 31% of total US market value, but there are a dozen countries where more than that is in just ONE stock. In Australia there is also rising concern that CBA is now 12 % of total ASX market value. Actually, this is still relatively low. What concerns me is NOT concentrations, but excessive VALUATIONS, and over-confidence that earnings and dividends will rise to justify current prices. &

June 2025 snapshot: another great month (and financial year) for shares and diversified investors

Another month of strong gains on global share markets, across almost all industry sectors. Gold and oil prices spiked briefly after the US bombing of Iran, but receded by month end. Industrial commodities are mostly down on global slowdown fears plus over-production. Bond yields are down on global slowdown fears, and the US dollar continues to slide as per plan. For the 2024/5 financial year, diversified growth/balanced portfolios posted another year of above-average double-digit returns, despite all of the dramas and scares during the year.

'Time-in-the-Market' -v- 'Timing the Market'. Which is better? US share market outcomes

Share market returns over all holding periods - even up to 10, 20, and 30 years - are little more than a coin toss. 'Time in the Market' only works if you get the Timing right, which is mostly luck. Finance textbooks and retirement calculators are based on nice, smooth, theoretical curves that assume constant 'median' returns over long periods. But in the real world, only ONE person in the population gets the median. Half will get MORE (sometimes a lot more), and half will get LESS (sometimes a lot less). There have been decade+ periods of zero or even negative real returns. By the time you realise you're in the unlucky wrong half, it may be too late to adjust your strategy.

Virgin IPO – My 3 simple rules for IPOs (or: ‘This stinking mess again?!’)

Rule 1: If Private Equity is selling - Run. In the other direction. Fast. You can be sure the accounts will be riddled with fudged numbers, hidden liabilities, non-existent 'assets', and a pandora's box of under-handed skullduggery. Rule 2: Any ai (automated idiot) bot will tell you that the 'i' in IPO stands for 'initial'. But this is no 'virgin'. It's been around the block a few times. (Misleading PR. Refer to Rule 1). Rule 3: Ignore the glossy PR, high pressure sales tactics, highly-polished accounts, and do your own research into the business and industry. In this case, why would I want to be part-owner of an under-capitalised, foreign-controlled player in a highly parochial market that has never profitably supported more than one dominant player, which is a government-protected, ex-gov department that wrote the book on political schmoozing?

Slides from my session at the Australian Shareholders' Association seminar on 7 May 2025, Sydney

Here are the slides from my session at the Australian Shareholders' Accociation seminar on 7 May 2025, Sydney. Highlights: 4 things about the future we can predict with certainty. 4 things about the future we can be reasonably certain about. Plus we cover - human nature - investor behaviour - bubbles & busts - inflation - longevity - what's behind Trump's agenda, and will it work?

March-2025 - Snapshot: Trump Slump continues - What's moving markets and why?

  Here's my monthly wrap-up of global financial markets for Aussie investors -  Share markets are down - but how serious is it? Currency markets - big moves are afoot. Can Trump talk down the Dollar? Where is the 'safe haven' money going - if not into bonds or US dollars? Updates on inflation, interest rates, recession fears, and plenty more.

‘Buying the dip?’ – ‘Catching Knives’ or ‘Bagging Bargains’? – the Aussie share market experience

Following my story on US market dips, here is the same analysis for the ASX: The Aussie market has had 36 dips of -10% or more since 1920.  Buying the dips still resulted in more 'Knives' than 'Bargains', and below average returns overall, but the outcomes were significantly better than buying the dips in the US market. 83% of dips on our market were led by falls on the US market. Of the few dips that were due to local factors alone, most were 'Bargains'. Where are we now? Will I be buying the dip here as the US boom deflates?  

After the mini-correction, should I ‘Buy the dip?’ - Am I ‘Catching Knives’ or ‘Bagging Bargains’?

The US stock market has had 31 'dips' of -10% or more since 1900. We look at what happened in each case if you 'bought the dip'. In most cases, a 10% dip turned out to be just the start of a much larger fall (further -15% fall on average), and for a much longer period (more than a year of further falls on average). Overall, buying the dip resulted in poor returns over subsequent 1, 3, and 5-year periods, but there were several times when 'buying the dip' led to high returns. Where are we now? How does today's market compare?

Australia’s aging population - are age pensions, benefits, and tax breaks sustainable in future?

  Many retirees live more frugally than necessary, and die with as much Super as they had at retirement. One possible reason may be a rising fear that the current government age pension system is not sustainable and may not be there for life. Despite our aging population, Australia is probably best placed of any country in the world to maintain its government age pension system. Fears of its demise are probably over-done. However, it is probably inevitable that the age pension, and/or the generous tax-breaks and benefits that go with it, will need to be scaled back in future. Future retirees should aim for financial independence, not welfare reliance, to be safe. 

Australia – land of horse & buggy era dinosaur companies. Where is the innovation, growth, renewal?

Most large ASX companies are century-old relics from the horse & buggy era, relying on domestic population growth, oligopoly pricing power, and gobbling up competitors for growth. But most big US companies are from the computer age. In the US it has been a continuous process of innovation, growth, global domination, then renewal, when they are overtaken and replaced by the next round of innovative, founder-led growth companies. How does Australia's horse & buggy era ASX compare to America's growth-and-renewal stock market, on shareholder returns?

What asset mix will double your money in 10 years? - Let me know your answer!

This relatively simple 10-year goal appears straightforward, but the outcomes seem little more than a coin toss based on when you happen to start.  Using a simple shares/bonds mix is hard enough, but it becomes even more difficult for more complex real-world investment goals. (For under 30s - 'Bitcoin, bro!') (For under 25s - 'Borrow $100 from your mum, create a meme-coin, pump it & dump it, and make a killing in 10 minutes!) 

Inflation Cycles & the US share market – same as Australia, with minor differences explained

The impact of US inflation on US shares has been the same as for Australia in my last story.  Returns are consistently LOWER when inflation is RISING, and consistently HIGHER when inflation is FALLING.  This applies to Nominal returns and even more so to Real returns.  The favourable share market returns over the past 20-30 years were driven largely by declining inflation and interest rates (and the policies that drove them), but that phase is over.  What this means for retirement planning. 

Bring on the Trump ‘volatility’! - My Volatility Spike Index separates the calm from the storm

Trump's first term was certainly entertaining, but was it volatile for financial markets? Let's look at facts, not mindless media chatter warning of  'more Trump volatility!', or 'another bumby ride!'. My Volatility Spike Index highlights and compares all volatility spikes since 1970.  

Quarter-century review: Asset class winners & losers, how things change (and how I got through it)!

How things can change, radically and quickly Booms collapse into busts, winners turn into losers, and prior losers arise from the ashes into new booms My personal journey through it all

November 2024 snapshot: Trump, Gold, & Bitcoin!

Here is my essential snapshot on global markets for Aussie investors.  The Trump circus continues - and a new era of crony capitalism. Share market up - heading for another cracking year. Interest rates & inflation - down everywhere but here. Gold & Bitcoin shine - but which is better?

Podcast with James Kirby – ‘How much should you have in Super – Seriously!’

Yesterday I had the great privilege and pleasure of being interviewed by James Kirby for his popular weekly podcast: ‘The Money Puzzle’ for The Australian. Here we tackle some of the most common questions from investors -  How much do you need? Why you can't rely on online retirement calculators? How to estimate how long you might live? Why 2/3 of retirees still rely on the government age pension after 30+ years of compulsory Super?

Virgin Airlines round 1: Crash Landing for investors

Virgin Airlines is in the news again. It is being tarted by shifty private equity tricksters hoping to lure another batch of gullible investors into parting with their hard-earned cash - again. Before getting into the merits of Round 2, it’s worth taking a look at what happened in Round 1. (Spoiler alert - Covid did not kill it. It was a dud from the start, and it was killed by bad management expanding too aggressively and running up too much debt.) What are the lessons from the last sorry tale? Has anything changed?

Active fund managers continue to destroy value and line their pockets with your money - Why?

Active fund managers are almost universally useless. Here is my updated report on how much wealth they destroy for Aussie investors. Are they getting any better? Why do we let them take $4.5b from our pockets every year? Where does the money go? How much do they pocket? How much do they just throw away through incompetence?  

‘What’s your Number? Part 2: 17 key factors driving ‘How much do I need’ & ‘How much can I spend?'

Here are 17 key drivers that determine 'How much do I need to retire', and 'How much can I afford to spend?' How do they work, and how do they apply to you? This handy guide will help you come up with your own Number that suits your needs and goals.

What's your Number? Part 1: 'How much do I need to retire?', 'How much can I afford to spend?'

Here we tackle these difficult questions, and similar questions like: 'When can I afford to retire?' 'Will my money last as long as I do?   Here are the two key Numbers to tackle these questions.  Plus two quick tests to help measure progress toward your goal.

The Low Inflation era of great returns is over. Investing just got a whole lot harder!

Investors enjoyed unusually high returns in the past couple of decades because EVERY asset class posted above average returns when inflation was low. A blind-folded monkey with a dart board picking any random mix of asset classes would have done well!   But that era of great returns from low inflation is over.  What types of assets do best in different inflation conditions? What is the best inflation hedge? How to build long term portfolios for high(er) inflation?

Dr Don Stammer's 60 years of investing

In Dr Don Stammer's speech this week, capping off his 60 year career, he only used 2 charts. Both were mine!      

Personal milestones for January 2024

January is often a big month for personal milestones.  Here are mine:

January 2024 snapshot - shares climb on hopes of early rate cuts as inflation falls

January 2024 snapshot - shares climb on hopes of early rate cuts as inflation falls.  Essential 1-page snapshot for Aussie investors – covering Australian and US share markets, short- and long-term interest rates, inflation, and exchange rate.

‘Frankly my dear . . . we need to include Franking Credits in reporting and portfolio planning’

Franking credits on dividends on Australian shares can add more than 1% per year to returns for Australian shareholders. But many professionals don’t include the value of franking credits in their clients’ returns – either historical, or forecast.

Warren Buffett: world’s greatest investor, but even he lost it 20 years ago.

Many readers wanted me to back up by bold claim that even the best investor in the world – Warren Buffet – suffered from the same disease that plagues every other successful fund manager in the world - fading out-performance over time.

Few active fund managers add value. But even value-adding managers almost always fade over time.

Many active fund managers start out well, but they all peak early in their careers, and then it is all downhill from there. Even for the best in the world.   Here are 20 actual fund examples, plus 15 reasons for inevitable fund performance fade (the causes are different for every fund), and how to spot them in time.

Most active fund managers continue to destroy value and line their pockets with your money

Over the year to June 2023, active managed funds in Australia destroyed $4.5 billion in wealth from retail investors. Half of this was a straight transfer of wealth from the pockets of innocent investors to the pockets of fund managers. The other half was genuine wealth destruction through incompetence.