October 20, 2016

A certain strategy for an uncertain market

Mark Twain was a great author but ‘stupendously incompetent’ when it came to investing, according to a feature in Time magazine earlier this year. Twain lost a fortune on an array of 19th-century start-ups based on such products as a steam pulley, a magnetic telegraph, a protein powder that “could end famine” and an engraving process. And the creator of such characters as Huckleberry Finn and Tom Sawyer lost money on railway stocks while rejecting an opportunity to invest in Bell Telephone – despite owning one of America’s first residential phones. Yet his gift with words enabled him to describe […]
October 13, 2016

Pondering presidential market impacts

Stock markets are pretty efficient at processing new information. Shocks, naturally, are unwelcome and it can take some time for markets to rationally analyse and understand the impacts of particular geopolitical events. Take the Brexit vote for example. On the day the vote was announced (June 24) the Australian sharemarket fell 3 per cent while the broader global sharemarket index was down even further. Three weeks later the Australian market was up 3 per cent and while the global market index did not recover as strongly it was at least back into positive territory. The initial surprise of the vote […]
September 22, 2016

The effects of sub-zero interest rates

In Germany, a government ten-year bond yields less than zero; its Investors actually lose money! Huh? What triggers a situation like this and could it happen in Australia? Australians currently enjoy – or not, depending on their circumstances – record low interest rates. The prevailing cash rate is currently 1.5 % and some economists are suggesting it could go lower. Many of the world’s economies have been there-done that. Their central banks have made the decision to explore previously uncharted territory: the sub-zero interest rate zone. So why would anyone buy an investment with a negative return? The short answer […]