Owning Mobile Payments In Asia

When navigating global equity markets, it helps to align one’s sails to the major tailwinds of growth. We have written about the advantages of investing with tailwinds on numerous occasions in the past (most notably here), and in summary: businesses in industries that are growing naturally will typically find it much easier to grow revenues, expand profit margins and ultimately earn higher returns on capital investment.

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Why Two Is Better Than One

Imagine you had a jar of jelly beans and you asked a large group of people to write down their estimate for the quantity of beans in the jar. What you would find is that, upon taking the average of everyone’s guesses, you arrive at a remarkably accurate estimate. Often, the accuracy of the average is higher than any individual estimate. How is this so?

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How Do You Limit Your Downside?

We recently met Frank and Vanessa, two hypothetical investors in global equities but with very different performance over a two-decade time frame. Frank turned a million dollars into $4 million, but in the same time Vanessa’s account grew to $11 million – all by avoiding the handful of down years in global equity markets from 1997 to 2017. So how can you limit the downturns when investing in global equities?

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Is Now The Time To Invest In Global Equities?

Today, we ask the question: is now the time in invest in global equities? This is a fair question to ask. The current bull market is one of the longest on record; and there are a number of risks out there on the horizon, such as: (i) the normalisation of monetary policies – particularly in the US; and (ii) the increasingly rocky relationship between the US and China.

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We Are Living In A Personalised World

“Consumer expectations have sky-rocketed to the point that hyper personalisation is no longer optional for brands, it’s imperative,” said Adobe’s Aseem Chandra recently. This is a clear trend we have been observing for some time. Consumers demand tailored experiences to their individual preferences. And this is dividing the consumer-facing business landscape into two groups: those who can deliver a personalised experience; and those who cannot.

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The Race For TV Content

Have you noticed how the quality of TV content has changed over the last decade? Game of Thrones, Homeland, Ozark, Breaking Bad, House of Cards. These shows are recent examples of high-value writing, casting and production which have sparked the age of “binge-watching”. Others are calling it “peak TV”.

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A Global Mega Trend To Consider

With so much noise coming in on a daily basis, it is sometimes hard for investors to keep a clear mind. Whether it’s distractions from President Trump, fears of the Fed, missiles launched from North Korea, the Brexit negotiations, the Qatar blockade or rumblings of a Chinese (and Australian) property bubble, investors could be forgiven for thinking there are few sensible investment opportunities left today.

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The Curious Case Of Fed Normalisation

This week, the Federal Reserve (Fed) hiked its target range for the federal funds rate for the second time this year to 1.00-1.25 percent. In a widely anticipated move, the Federal Open Market Committee (FOMC) said that the labor market has continued to strengthen, economic activity has been rising and household spending has picked up in recent months. But the interest rate decision was not the main event. The market was instead focused on how the Fed planned to deal with its US$4.5 trillion dollar balance sheet (shown below).

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The Art Of Positioning The Truth

Investing is never easy at the best of times. Making sense of complex financial accounts takes both time and the aptitude to anticipate the numerous ways in which CFOs can position their businesses in the most favourable light. Sometimes the business models themselves allow for great subjectivity in arriving at the reported earnings level. Sometimes management actively encourage investors to focus on favourable metrics, while discouraging the unfavourable ones. And sometimes, just sometimes, the numbers are simply wrong. Let’s step through a recent example of each.

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Video – The Demise Of Nine

Since 2015, Nine’s television revenues have been declining. In an age of Netflix, Apple TV and YouTube, consumers face a much wider choice of video on demand than they ever have before. And this means free-to-air television audiences in Australia are declining – by around 5% per annum. Is Nine’s current stock price of around $1.25 per share justified?

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Insperity Reaccelerates

One of our points of differentiation versus many peers relates to our ability to invest across the size spectrum. Consider that, at the time of writing, the global funds’ long position with the largest market capitalization was Apple (NASDAQ: AAPL), at US$700 billion. Meanwhile, the long position with the smallest market capitalization was Insperity (NYSE: NSP), at just US$1.7 billion. And interestingly, Insperity has been our best long performer in our global portfolios to date, with the stock nearly doubling since we first bought it about one year ago.

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