Monthly Archive: September 2011

Sep 27

Slight rise for Australian Government Bonds over last 2 weeks

Source: Bloomberg, RBA The above chart uses price from this morning for the 28 September data and as it shows there has only been a slight improvement in the yield curve over the last couple of weeks so really  no significant impact on troubled beliefs at this point in time. Overnight the equity markets were …

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Sep 26

Sensational Bearish Interview

Found this via Zero Hedge …sensational interview on the BBC with a trader who believes “Goldman Sachs rules the world” and that “this economic crisis is like a cancer, if you just wait and wait thinking this  is going  to go away, just like a cancer its going to grow and its gong to be …

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Sep 25

Reducing Equity Risk with Bonds

Earlier in the week I was at a meeting whereby one of the attendees suggested that in a balanced portfolio (~70% equities) the equities proportion adds around 90% of the risk, and then in yesterday’s Australian Financial Review I see a headline quote from Stephen Nash (FIIG Securities) that said, “If investors replaced half their …

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Sep 22

Europe equity markets getting smashed…

…and US futures not looking much better. The Euro Stoxx 50 is down 4.4% at the time of writing; UK, German, French, and Spanish equity markets are all down more than 4.3%. The S&P500 futures are down around 1.5% and Australia’s SPI200 is also down around 1%. Plenty of downside risk yet whilst politicians kick …

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Sep 21

Tonight should be a turning point…either way

With the Federal Open Mark Committee (FOMC) currently meeting, many pundits are expecting a very very big package to be announced by Ben Bernanke tomorrow. If its not what the market expects, then I imagine there’ll be more equity market pain but if it is big, then I’m confident we’ll see a strong market (so …

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Sep 20

What returns should bonds provide over the next 5 years?

This is one of the most frequent questions I am asked by advisers and my usual answer is, “well, the yield of Australin bonds is around x% so that’s pretty much what you should expect to receive”. I’ve pretty much accepted that my answer is roughly correct but never really tested its accuracy..until now! Source: …

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Sep 16

Australian Government Bond Yield Curve…still dropping

Source: Reserve Bank of Australia I’ve just updated my last yield curve from just over two weeks ago and as the above chart shows yields have dropped another ~40bps since then. This is an indication of the lack of global stability driven out of Europe and US and a resolution to their issues is clearly …

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Sep 15

Hedge Funds and Banks straining

Last night UBS lost $2billion due to another “rogue” doing unauthorised trades and as reported last night by Zero Hedge, Goldman Sachs are shutting down their famed (or perhaps infamous), Global Alpha hedge fund. The obvious question posed by Zero Hedge is whose next? and I wonder which Australian fund(s), if any, will be hit. …

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Sep 12

More on Asset weighted vs Time Weighted Returns

I just did some simple analysis of balanced fund returns and on a time weighted basis (excluding tax), balanced funds returned on average a compound monthly return of 0.38% in the ten years to the end of August 2011. This is equivalent of a compound annual growth rate of approximately 4.7%. I then assumed the …

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Sep 10

A few thoughts on investment strategy for today

With the US heading towards recession and the Euro Sovereign Crisis getting ugly again where to invest one’s funds has never been tougher. Australian bonds yields are around 4%, meaning they are on PE ratio of 25 which compared to local and global shares, which are currently on forward PEs of around 10, are very …

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