THE GROWTH SELL-OFF and the influence of STYLE INVESTING After the results season, I wrote a piece on SM titled “Result Season Lessons for Me”. The upshot was what I saw as the early signs of a sector rotation and the potential underperformance of quality growth stocks, which comprise a significant portion of my portfolio. Below is a table comparing the performance of my benchmark to the pride of the fleet (IMO) of Australian quality growth stocks. As we can see, almost without exception, there is solid underperformance. My benchmark is equal-weighted, not market-cap-weighted, as I have previously covered the reasons for this approach. So what's going on here to get this widespread negativity? The concept of Style Investing is useful in this regard, imo. I first came across style investing when doing the CFA course from 1998-2000. There is a book by Bernstein called Style Investing if you want to go down the rabbit hole. In summary, it abstracts away from individual sto...
CHECKLIST FOR INVESTMENTS Overall I want this to be short enough so that I will use it and long enough to be useful. not War and Peace. In deference to Charlie Munger who continually suggested using a checklist, well I am getting on! Can be built up and on over time. Understandable business Do you understand the positioning of the business versus its competitors, customers and suppliers? What are the critical products, services and relationships? Is the size of the market(s) able to be estimated? Are there existential risks to the business, structural decline, or obsolescence? Operating History EPS growth, consistency/volatility is it forecastable? ROE/GM stability and level. Ability to manage margins. Total asset growth can the business profitably deploy assets. What has the reinvestment rate been? NPM level and stability. Does the business generate FCF, does CF reconcile to earnings? Given the above has the company favourable LT prospects? Management Condu...
PORTFOLIO RETURN AND ANALYSIS FOR 2025 I use the nearest year-end Friday to rule off results. June Y/e PORTFOLIO BENCHMARK 2025 18.8% 11.5% 2024 20.8% 13.4% 2023 16.9% 7.6% CAGR 19.0% 10.8% Please note that the portfolio numbers are based on the total market value after deducting fees and taxes, including regulatory, accounting and audit fees. The benchmark has no fees or taxes deducted. There are now large unrealised tax liabilities in the portfolio that may be realised over time. I may highlight these at some point in the future if they become larger. Taxes paid by my SMSF and Company are deducted from the returns, while taxes of the family trust are paid by me separately. Secondly, the portfolio is the bulk of my wealth, by a large margin, which means this strategy is not a moonshot satellite or absolut...
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