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Their earnings have sunk since the GFC, yet even weaker bases underpin the S&P 500’s returns. Aussie stocks thus offer better prospects. Overview Over the past decade and more, the total (incorporating the reinvestment of dividends) returns of the All Ordinaries and S&P/ASX 200 indexes have underperformed the S&P 500 Index. According to Roger Montgomery, dividends … [Read more...] about Why Australian equities will again outperform

Their forecasts lure most investors into overconfidence – and thus losses. If you recognise experts’ biases, you can grasp opportunities. Preview A week, it’s often been said, is a long time in politics. If so, a couple of days can be an eternity in financial markets! On 2 August, a journalist in The Australian (“Markets find ‘sweet spot’ in policy, outlook”) wrote: “... the … [Read more...] about How experts’ “systematic mispredictions” improve our returns

Its power transition is fading, its energy transition is fiction, net zero is fantasy – and politicians’ transition to reality has begun. The mainstream media’s coverage of “climate and energy policy” (the Albanese government has yoked the latter to the former) is grossly unbalanced. Whether it’s The Australian or Guardian Australia, reports are slanted overwhelmingly towards … [Read more...] about Investors, prepare: Australia will abandon its emissions targets

He’ll likely win because the U.S. is in a very bad way; but whoever wins will probably fail because what’s undiagnosed remains untreated. Donald Trump will likely defeat Joe Biden at the American presidential election on 5 November. One major reason is well-known but not, in some mainstream media outlets,  widely-publicised: for the past several months, multiple organisations’ … [Read more...] about Trump will likely win – but won’t make America great again

Next year’s estimated earnings massively exceed today’s actual earnings, and the market’s P/E is sky-high. They augur much lower returns. “There has been a positive start to the year for Australian corporate earnings estimates,” reported The Australian on 2 February. It quoted the head of Australian equities research at a global investment institution: “I think what’s … [Read more...] about Is the consensus herding you towards hefty losses?

The book’s premises are false and its forecasts have been wildly inaccurate. By exposing its flaws I reconfirm some basics of investment. This year marks the 25th anniversary of James Glassman’s and Kevin Hassett’s book Dow 36,000: the New Strategy for Profiting from the Coming Rise in the Stock Market (Random House, 1999). It didn’t merely contend that stocks were grossly … [Read more...] about Does Dow 40,000 Vindicate Dow 36,000?

Changes of sentiment don’t cause markets to ebb and flow; but their short-term fluctuations, which are largely random, affect sentiment. “So far, so good!” Ken Fisher recently exulted (“To forecast financial markets, get sentimental,” The Australian, 16 April). “My 2024 outlook (issued in January) called for strong gains down under and worldwide – but with Aussie stocks … [Read more...] about Why we mostly ignore market sentiment

The “transition to net zero” isn’t happening and “green energy” has long generated red ink. When will the herd finally acknowledge reality? “Investors can’t ignore a megatrend that’s transforming consumer, corporate and government behaviour worldwide,” Michelle Lopez asserted three years ago (see “The energy revolution is happening whether we want it or not,” 10 May 2021). … [Read more...] about “Net zero” isn’t a Megatrend: It’s a Mega-trap

“Experts” obsess about irrelevancies, overlook what’s crucial – and are once again prodding the herd towards the risk of large losses. It’s “an article of faith among Wall Street research departments,” wrote David Dreman in Contrarian Investment Strategy (1979): “Nothing is as important in the practice of security analysis as estimating the earnings outlook.” Whether for … [Read more...] about Everything the mainstream says about earnings is wrong

Overview “Mr Market is there to serve you, not to guide you,” wrote Warren Buffett in his letter to Berkshire Hathaway’s shareholders in 1987. “If he (is) ... in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand ... Mr Market, … [Read more...] about Stock tips are for patsies – are you a patsy?