Will Balance Sheet Normalisation Deflate Asset Prices?
For the first time since the Fed began its quantitative easing program in 2009, the FOMC announced in June it would start a gradual unwind of its balance sheet sometime this year. For those who could benefit from a simple explanation of what this means, see the following bullet points: Prior to the Fed embarking on […]
Australia’s credit-fuelled growth story
Every year around this time, the Bank of International Settlements (BIS) delivers its Annual Report on the state of the global economy. It is always worth reading, in our view, and is full of a number of really important insights that investors need to be mindful of. One such insight is the difference between those […]
What will be of the new financial year?
Australia is one of the few countries in the world that close out their financial year in June. So to Australian investors, we wish you a happy financial new year and ask what will be of the twelve months to come? The 2017 financial year was kind to equity investors. The MSCI Total Return Index […]
Underestimating the Power of Compounding
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” – Bill Gates This pithy quote by Gates touches on an important shortcoming many of us face, either knowingly or unknowingly: our brains are not very good at accounting for the […]
The power of scale in our new digital world
If you are an Australian CEO, you are probably wondering if Amazon will one day disrupt your business. The threat of Amazon to Australian business is the topic du jour all of a sudden, so it is worth understanding exactly why Amazon is so scary. Amazon is a big business, for sure. Its market capitalisation […]
The curious case of Fed normalisation
This week, the Federal Reserve (Fed) hiked its target range for the federal funds rate for the second time this year to 1.00-1.25 percent. In a widely anticipated move, the Federal Open Market Committee (FOMC) said that the labor market has continued to strengthen, economic activity has been rising and household spending has picked up […]
US household debt has surpassed the 2008 peak – should we be concerned?
The recent quarterly report on US household debt published by the Federal Reserve Bank of New York showed that as of March 31, 2017, total US household debt of $12.7 trillion has surpassed the peak level in 2008. This milestone has been a long time coming, and has been touted as both a reflection of […]
Not all platforms are created equal
Last week, Andrew Macken shared some thoughts on what we believe will be the business model of the future – the Online Technology Platform. Many of the largest businesses in today’s world, such as Apple, Amazon, Alibaba, Facebook and Tencent are technology platforms. However, not all platforms are created equal, and it would serve investors […]
Who are the businesses of the future?
In football, a successful player does not run to where the ball was, or where it is right now. They run to where the ball is going to be. The same idea is followed by successful investors. They are typically less interested in the successful businesses of yesteryear, or even today’s success stories. For successful […]
Passive Investors – What is your thesis?
The debate as to the merits of investing passively or actively rages on. And over recent months, we have observed a sharp acceleration of flows into passive equity strategies – largely at the expense of active equity strategies. Source: Citi We have argued in the past that, in a lower-returning world, “locking in” the market […]