Posts

10k Words - February 2021

Image
Apparently , Confucius didn’t say “One Picture is Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in advertisements on the sides of streetcars. Even without the credibility of Confucius behind it, we think this saying has merit. Each month we share a few charts or images we consider noteworthy.  A new research paper found that when retail traders on Robinhood buy a stock, it tends to underperform over the next three to 20 days; looking at some of the craziness of the times we have surging margin debt (relative to GDP) via TheFelderReport.com; and the performance of the most shorted stocks on January 28 via Bespoke. Grant's Interest Rate Observer offers up a chuckle on the extent to which the Fed will go to provide liquidity. Robeco's valuation metrics and Goldman Sach's Risk Appetite Index are reflective of how markets continue to buy risk in this environment. Consistent with the risk appetite, small caps are expec

Fleshing out our take on IPOs

Livewire Markets included some commentary from Equitable Investors in its IPO round-up - which you can find here - and we thought we would take he opportunity to flesh things out here. Discipline creeping in? Our footnote to the description of a buoyant 2020 for IPOs (as we set out for Livewire) was that the market appeared to take a more discerning approach in the last few weeks. Several IPOs slated for the ASX were cancelled and ready-made meals company YouFoodz got its listing away but then fell 25% on its first day.  We would like to think that there was more than just investor fatigue at work. A common structure to fund companies preparing to IPO has been to conduct a "pre-IPO" raising where investors commit capital that will be converted to shares at a discount to the IPO price. Quite often that discount is around the 20% mark. It was probably a healthy sign pre-Christmas that the market did not support a proposed IPO with convertible notes on issue that were to be co

10k Words - January 2021

Image
  Apparently , Confucius didn’t say “One Picture is Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in advertisements on the sides of streetcars. Even without the credibility of Confucius behind it, we think this saying has merit. Each month we share a few charts or images we consider noteworthy.  Citi strategist Matt King summarises the legacy of 2020 across divisions in politics and the economy then Bloomberg shows US treasury yields hitting 1% for the first time since March. Bespoke debunks the view that it is bad for US equities for Democrats to have full control of federal politics. Market frothiness is on display in Factset's chart of SPAC (Special Purpose Acquisition Company or “blank check”) IPOs. UK fund Fasanara Capital shows that monthly variations in markets have been expanding, while US quantitative fund AQR argues with one chart that the prospects for a standard balanced portfolio are low and the opportunity

10k Words - December 2020

Image
Apparently , Confucius didn’t say “One Picture is Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in advertisements on the sides of streetcars. Even without the credibility of Confucius behind it, we think this saying has merit. Each month we share a few charts or images we consider noteworthy.  Lets start with Buy Now Pay Later (BNPL - and you can watch Equitable Investors' Martin Pretty and Cyan's Dean Fergie recent chat about BNPL  here ) - with Wilsons running the comps on the eight ASX listings in the space (how many do we need?). While the Robinhood investors remain in focus, data on US equities ownership shows those aged under 54 own less of the equity "pie" now than in past decades. If Deutsche Bank projections on COVID-19 immunity in wealthy nations prove correct, herd immunity is on its way in 2021. Morgan Stanley says global GDP will be back on trend in the next six months. And globally fund manage

Small Talk | November 9 to November 13, 2020

Image
At the “top-down” level the week past was a wild one with investors jumping back into “value” stocks in a move triggered by positive COVID-19 vaccine developments. Of course, what the market uses as a proxy for “value” is stocks priced on low multiples of their earnings or book value relative to the market - the data above shows how such stocks enjoyed a great resurgence during the week. But whether these stocks are good value (or good buying) is another question altogether. Benchmark Indices | November 9  to November 13 Source: Sentieo, FT.com, Equitable Investors Market’s Best & Worst of the Week - from our “FIT” Index Chart of the Week Long-Short Momentum Factor - Excess Daily Return Source: OSAM Research, FactorInvestor This is an excerpt from the weekly Small Talk update for clients of Equitable Investors.

10k Words - November 2020

Image
Apparently , Confucius didn’t say “One Picture is Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in advertisements on the sides of streetcars. Even without the credibility of Confucius behind it, we think this saying has merit. Each month we share a few charts or images we consider noteworthy.  Running with a US focus, TheDailyShot looks at how individual investors are fuelling trade in lowly-priced stocks (in dollar pricing, not valuation multiple), with small caps back in favour according to TradingView and TheDailyShot. BAML shows the market is reacting the opposite way around to tech sector earning surprises, while Bloomberg gives us a look at US EPS growth by sector. Google shows us how retail and recreation foot traffic has been impacted, via WSJ, while Bloomberg and SentimenTrader update us on low and sub-zero bond yields. Finally, we couldn't completely avoid the US Presidential election so WSJ shows us the declin

10k Words - October 2020

Image
  Apparently , Confucius didn’t say “One Picture is Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in advertisements on the sides of streetcars. Even without the credibility of Confucius behind it, we think this saying has merit. Each month we share a few charts or images we consider noteworthy.  A focus on the US to begin with and Yale's monthly surveying showing investor confidence that stocks won't crash has taken a beating this year; while on the other hand Bloomberg shows that US dollar weakness has correlated with strength in US equities. Taking a look at the disconnect between markets and the economy, ASI-Transmatch's rail traffic movements in the US have recovered significant ground but remain below pre-COVID-19 levels; while FactorInvestor shows the step-change in e-commerce penetration. Deutsche Bank's look at US market PEs in different inflation regimes is interesting. Moodys, meanwhile, shows corpo

10k Words - September 2020

Image
Apparently , Confucius didn’t say “One Picture is Worth Ten Thousand Words” after all. It was an advertisement in a 1920s trade journal for the use of images in advertisements on the sides of streetcars. Even without the credibility of Confucius behind it, we think this saying has merit. Each month we share a few charts or images we consider noteworthy.  Valuation is at the fore this month, starting with the simplistic view of the forward P/E multiple on the S&P 500 being  right up at "dot com" boom levels, via The Felder Report. FactorInvestor shows the composition of the S&P 500 has shifted such that the top five "Tech Titans" are a larger part of the index now than they were in that boom twenty years ago.  Apple's market cap is now greater than the national aggregate of stocks in countries like Germany - something unimaginable 10 years earlier - but now Apple, Microsoft and Amazon all have market caps greater than Australia's market aggregate. And

Disclaimer

Nothing in this blog constitutes investment advice - or advice in any other field. Neither the information, commentary or any opinion contained in this blog constitutes a solicitation or offer by Equitable Investors Pty Ltd (Equitable Investors) or its affiliates to buy or sell any securities or other financial instruments. Nor shall any such security be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.

The content of this blog should not be relied upon in making investment decisions.Any decisions based on information contained on this blog are the sole responsibility of the visitor. In exchange for using this blog, the visitor agree to indemnify Equitable Investors and hold Equitable Investors, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to legal fees) arising from your use of this blog, from your violation of these Terms or from any decisions that the visitor makes based on such information.

This blog is for information purposes only and is not intended to be relied upon as a forecast, research or investment advice. The information on this blog does not constitute a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Although this material is based upon information that Equitable Investors considers reliable and endeavours to keep current, Equitable Investors does not assure that this material is accurate, current or complete, and it should not be relied upon as such. Any opinions expressed on this blog may change as subsequent conditions vary.

Equitable Investors does not warrant, either expressly or implied, the accuracy or completeness of the information, text, graphics, links or other items contained on this blog and does not warrant that the functions contained in this blog will be uninterrupted or error-free, that defects will be corrected, or that the blog will be free of viruses or other harmful components.Equitable Investors expressly disclaims all liability for errors and omissions in the materials on this blog and for the use or interpretation by others of information contained on the blog.