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Showing posts from November, 2018

Copper Got Hot

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We're finalising a "State of the Market" presentation for clients of Equitable Investors and have been thinking about different ways to look at how "hot" the Australian sharemarket got.

Here's one chart we put together showing a surge in the level of interest in the daytraders chat forum, HotCopper, as measured by Google Trends

















The AFR, the local must-read for investors, has maintained steady interest levels since 2010HotCopper, the home of speculators and daytraders, has experienced a surge in interest“Peak” HotCopper appears to have been January 2018Interest in speculative micro-cap and tech stocks was curbed ahead of the broader market decline in October amid scandals that played out earlier in calendar 2018 such as the collapse of online video review business BigUn and the implosion of logistics app player GetSwift.

Ten Thousand Words - November 2018

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Apparently, Confucius didn’t say “One Picture 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.

This month, the stock price of listed hedge fund giant Och-Ziff shows that buying things just because they have plunged in price doesn't mean they will go up again; high-flying ASX listing with P/E multiples greater than 26x were the most heavily sold in October; while The Reformed Broker highlighted just how significant changes in P/E multiples are to returns; historic data shows there's no reason, based on seasonality, to expect a bounce in ASX small industrials in November; Pimco sets out how correlated with equities different debt instruments are;  and Stratfor charts out how the top 15 cities hold ~11% of the world's wealt…

October Sell-Off Hit High-Altitude PE Stocks Hardest

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Companies listed on the ASX with high price to earnings multiples bore the brunt of last month's sell-off.

Equitable Investors reviewed the data on the torrid month for learning and insight. Figure 1, below, shows the worst hit companies were those with price-to-earnings (PE) multiples greater than 26 times the earnings reported in the last 12 months.

Almost 90% of companies with PE multiples of between 40.4x and 80.3x declined in October, compared to about 78% of all stocks.

The least impacted stocks amid the negativity were those trading on multiples close to the market average in the band of 16.3x to 19.6x.


Figure 1: October share price performance sorted by Price-to-Earnings (PE) multiples (using earnings from the last 12 months) at the beginning of the month

Source: Equitable Investors, Sentieo
Note we have excluded most negative PE bands from this table


As noted in this column for livewire markets, a high-flying company like logistics software group Wisetech Global (WTC), priced…

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