Thank Cheap Money For All The Tech

There can be virtually no doubt that we are in a golden age of technological advances that promise to change the world. From 3D printers churning out both metal objects and human organs, to digital advertising targeting customers based on their moods, and from electric vehicles promising to clean up the atmosphere to the self-described “sharing” economy putting power back in the hands of ‘the people’ (but not holiday-pay or superannuation in the hands of its workers), the technology revolution we are witnessing, and its pace, marks a point in history many of our parents and grandparents could not have imagined.

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Dividends. What’s All The Fuss?

In the last few days Opposition Labor Leader Bill Shorten has proposed a radical transformation of dividend imputation. Putting aside his mistaken belief that his voters are “Aussie Battlers”- when in fact they are hard-working small business owners and contractors, many of whom receive franked dividends from their business endeavors – it’s worth looking at what all the fuss is about…

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Berkshire By The Numbers

Over the weekend Berkshire Hathaway, the company that has been under Warren Buffett’s stewardship for more than half a century, released its annual report and letter to shareholders. While the annual report contains the financial results of the all Berkshire’s businesses for the preceding year, it is Mr Buffett’s letter to his “partners” that the financial and media community hang out for. It’s usually full of insight and wit juxtaposed with the dryness of the regulatory filing.

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US Cash Rates Up From 0.5% To 3.5% In The Three Years To Late-2019

If our friends at Deutsche Bank are right in forecasting the US unemployment rate to decline from the current 17 year low of 4.1 per cent to 3.2 per cent by-late 2019, the US Federal Reserve are going to have a delicate balancing act as they lift the cash rate in trying to keep inflationary expectations under control. When I say a delicate balancing act, it is interesting to note the US Federal Reserve has historically, during these periods of rising inflation, tightened the cash rate to a real 1.25 per cent.

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It Takes More Than Interest Rates To Keep A Good Market Down!

In the first two trading days of February US interest rates accelerated their advance of the previous few months and the US equity market tumbled (I wrote about our approach to handling the market movements here.) Commentators were quick to point to a causal relationship and many investors worried that any hint of higher rates would continue to up-end stock prices.

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Sometimes ‘Why’ Is Not The Right Question

As value investors, we are constantly asking ourselves “why” – why is a company undervalued, why is another overvalued, why is our thesis different to the market’s and why is it more likely to be right, et cetera. The better we can answer these why’s, the better we are likely to perform against the average market participant. However, not all developments need or should have an explanation. One example in this category is “why did the market fall 5 per cent on Monday?”.

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