Whether inflation is real, transitory, or imaginary – in the end, it does not matter. The market prices in expectations of future movements. If the market thinks inflation is coming, assets & pricing will move accordingly. Perception is reality when it comes to the way prices move. A walk back in time Is there a …
In many ways, an investor’s job is to work out what the world might look like a year down the track. Will economic growth look worse or better than current conditions? Will it be easier or harder for companies to grow profit? Let us look down the road to see what 2021 might bring. “Bull …
The adage goes “Sell in May and go away” with the idea to buy back in after Halloween. It is the premise that the market has seasonality to it. As spring follows winter, the market performs better from October- April compared to May – October. Is there any truth that investors should look at buying …
While crashes are illogical, corrections are quite normal. If a crash is defined by a fall in the sharemarket greater than 20%, then crashes are not normal occurrences. Since 2000, there have been 5 instances where the Australian market has fallen greater than 20%. The largest of those was the Global Financial Crisis where the …
Reporting season is when companies release the numbers for what happened in the last financial year and provide an update on what to expect in the new financial year. For analysts, it is all about looking for changes. If you want the value of a company to go up or down, you need something to …
The biggest question for investors is are we in a boom or a bust? Each bust sets the stage for a new boom. It is cultivated with low-interest rates, easy monetary conditions, and a negative outlook. They say Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria. So, …
Volatility can give investors insight into whether market conditions are ripe to support a rising market or whether investors should strap themselves in for a roller coaster ride. When something is volatile, it is prone to explode. Volatility means big moves. When volatility spikes, it’s time to hang on tight, and perhaps even shut your …
If you want the value of a company to go up or down, you need something to change. If everything was to remain the same, then the value of the company should not change. Think of the local corner store. Let’s say one day you buy it for $1 million. 3 months later, you decide …
Let’s start with the first: getting capital to start with. Unless you win the lotto or come into a windfall, for most people this will mean saving money. The best way to save money is to automate the process as much as possible. Most of us know that at some level we have self-control issues, …
Unsurprisingly when P/E ratios and dividend yields reach extreme levels, stock prices usually revert back to a normal level or a longer-term mean. The question is whether this is due to a change in the financial situation of a company or a change in stock price. In other words, can P/E ratios and dividend yields …
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