Irrational exuberance

Now is a good time to remember the lessons of history about growth shares versus value shares.

Correct \’Haircuts\’

\’Haircut\’ is a term that has a precise meaning in finance.  But many journalists and commentators use the term incorrectly, which is unfortunate because \’haircuts\’ have played a major role in the GFC.  Knowing what haircuts really are is crucial to understanding the liquidity crises of the GFC.

Eyes on the prize

Sporting tournaments, such as Wimbledon, The Masters and The Melbourne Cup, receive great fanfare, but much more important \’tournaments\’ are playing out continuously in the economy.

Bank hybrid notes versus bank shares

Bank hybrid notes have received a lot of unfavourable press in the last year.   I think many commentators simply don\’t understand them.  I like them a lot and think their combination of high yields and good capital protection should give them a place in most investor\’s portfolios as a solid defensive asset.

Housing bubbles

There is growing concern that a bubble is developing in the residential property market in Australia.  Prices have certainly zoomed up in Melbourne, and especially Sydney, over the last two years; see the chart below of Australian residential property prices.

Gamma\’d by the Swiss central bank (SNB)

The Swiss central bank (SNB) suddenly abandoned its peg of the SFr against the Euro on 15 January after having promised only 3 days before that it would not remove the peg.

The yield curve inverts

Are interest rates on fixed rate loans going to rise or fall over the next year?  Should investors fix the rate on their investment loans while rates are low?

Going \’long vol\’ and \’short vol\’

When a share market investor says that they are \’long volatility\’ or \’short volatility\’, what precisely does that mean?   Usually being \’long\’ or \’short\’ an asset means that you have bought it or sold it.  To go long BHP you would buy BHP shares. To short BHP you would borrow BHP shares and then […]

The open IPO channel

A lot of new firms listed on the Australian Securities Exchange (ASX) for the first time in 2014.  Over $16 billion of shares were sold in 60 initial public offerings of shares (IPOs).  This high value and high number of IPOs represented a re-opening of that market.  The well known graph below is taken from […]

Value and growth

It is often stated that things are never as bad as they seem or as good as they seem.  I was reminded of that maxim when reading about the fortunes of two firms recently.