Showing posts from September, 2020

10k Words - September 2020

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

Blessed were the "cheap" and the loss-makers (or what ASX stocks did in the August earnings season)

Our analysis indicates that August was a month of extremes on the ASX with a renewed focus on price at one end of the spectrum but also a strong element of speculation at the other. This is probably a good environment for micro caps - some of whom have been lowly priced compared to metrics for larger businesses in their sectors; and others that are at an early stage and require "animal spirits" to drive their share prices. The big guns on the ASX, as measured by the S&P/ASX 100, pushed through for a 1.9% gain in August, against a backdrop of dividend cuts and with considerable correlation for many of these large businesses with the weak domestic economy. The S&P/ASX Small Industrials was up 9.5%. Our Dragonfly Fund, which is heavily weighted to micro caps, looks like it had its best ever single month return (for the second consecutive month) - but we're still finalising the figures. 2.5 stocks up for every one that declined We track a pool of over 600 ASX-listed c


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