Finance & Fury Podcast

Welcome to Finance and Fury. Time for value? Looking at the value rotation occurring within the share market A value rotation is a term used to describe a shift in investment behaviour – where investors start favouring value shares instead of growth shares Previous episode – inflation expectations and what is occurring to bond yields – did an episode a while back on why growth shares have been beating value – however a rotation may be occurring – where value investing may start catching up in performance Value investing – buying undervalued companies based around their intrinsic or book value – essentially involves buying beaten-up or unloved shares Over the past half decade – growth shares have been in high demand – hence they have seen their prices go up – blowing metrics like PE ratios through the roof – but this has left large segments of the market untouched and undervalued compared to their growth counterparts Over the past three months – essentially since the start of the year – the mood of the marke

Welcome to Finance and Fury. In the last episode I went through the bond market and how inflation expectations being on the rise are having their effects, yield curves starting to steepen. So what will happen to other asset classes? In this episode we will look at this question. If the trend of nominal yields continues, what will be the effects on different asset classes, cash, shares and gold? Before we get into that – quick recap that when talking about yields, it is the returns on bonds expressed as a percentage bond yields are inversely related to the bond prices. The lower the price, the higher the yield, and vice versa Bond yields have been declining since 1982 in a long-term trend – as they were nearing zero, could continue into the negative long term or reverse course – 10-year Treasury yields have fallen from 15.8% 40 years ago There are fears that due to the economic recovery plans for every nation being printing money for stimulus measures – that this could lead to an inflation outbreak – hence,

Welcome to Finance and Fury. This episode we will be looking at what is happening in the bond market, how the RBA is struggling to maintain their targets on bond yields for 3y and 10 year - as well as some of its implications on the debt markets and government. What is going on? over the last few weeks there has been a surprise to the markets – the emergence of a higher 10-year rates on government bonds – the rates went up about 0.45% in Feb and 0.55% since the start of the year This was pretty surprising but it actually does make sense in a way – why? To start with – all we have to do is look what has occurred over the past year – Looking back on 2020 there was an unprecedented level of stimulus policies - both fiscal and monetary – QE, corporate bond purchases, ZIRP, stimulus payments The RBA announced on Feb 1 that they were doing an extension to its QE program that they started last year by a further A$100 billion - They have also said it doesn’t expect to increase interest rates until 2024 Both of the

Welcome to Finance and Fury. Are sectors of the share market in a bubble, one in particular that comes to mind would be the US tech sector. There have been many bubbles in financial markets throughout history – if enough excitement is generated around some new asset, or commodity that is seen as the next big thing and everyone starts buying – bubbles can emerge in prices covered some of them, south sea bubble, tulip mania – one that may be the most similar is the dotcom bubble – But how exactly is a bubble designed? And what metrics can be used to measure this The traditional definition of an economic bubble – “An economic bubble or asset bubble is a situation in which asset prices appear to be based on implausible or inconsistent views about the future. It could also be described as trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value.” However – the intrinsic value – or fair value of an asset can be fairly subjective – especially for new or emerging companies or ass

Welcome to Finance and Fury.  This episode will looking at infrastructure as an asset class, to see if it can help to provide some diversification for portfolios and decent moving forward. Infrastructure – physical assets that provide services that are essential for us to live our lives. The aim is to invest in assets that if the market booms or busts, it provides some diversification to traditional asset classes. Traditional Asset classes – Defensive – Cash, Fixed interest (gov, corporate bonds, credit) Growth – Property, Shares – Australian or international Where does infrastructure sit – still in the growth category - In my view – can help to provide a real asset can play a role in an investment portfolio – two component for reasons to invest in infrastructure Diversification – infrastructure allows an investment in lower correlation to other asset classes – however, depending on the type on investment purchased, some may have “higher beta and therefore less diversifying” Real use – value – investment

Welcome to Finance and Fury. What is stakeholder theory and what does it mean for capital markets and investments? World Economic Forum annual agenda occurred a few weeks ago. One year ago, the World Economic Forum launched a new ‘Davos Manifesto’ in support of stakeholder capitalism – this year – stakeholder capitalism, or stakeholder theory was at the forefront of many of the agenda’s What is stakeholder theory – like many things, the definition has changed over time – Originally - Stakeholder Theory is a concept from R. Edward Freeman (American Philosopher and Professor) when he introduced it in 1984 – it was a theory of organisational management and business ethics – aimed to address morals and values in managing an organisation - The theory argues that a firm should create value for all stakeholders, not just shareholders Since the 1980s - there has been a massive rise in the theory – as well as an expansion on what is defined within the term value and who is considered a stakeholder From R. Edward Fre

Welcome to Finance and Fury. In this episode, we are going to look at some of the potential fallouts from the GameStop saga – looking at market disruptions, market integrity and the ongoing implications of potential regulation changes If you want an overview of this – check out last Mondays episode. But in short - Gamers are good at playing games – when they know the rules The rules of the financial game are starting to be more understood by people online - Some people on reddit were paying attention to the Form 13F filings in the US for hedge funds – have to be lodged each quarter– saw that GME was heavily shorted by a few funds, The one firm that received the most attention, Melvin Capital had heavy short positions The price of GME has come back down a fair bit from its high point last week, was sitting at around $60 on Friday last week – but there was a gradual increase from around $18 at the start of Jan to around the last week of Jan – when the price started to sky rocket – went up over $400 – triggere

Welcome to Finance and Fury. In this episode, we're going to cover the GameStop saga. It's still ongoing at the time of recording this, so new information may be out by the time you listen. I wasn’t going to cover this topic – I saw this first pop up either Monday or Tuesday last week – looked like a funny story – retail traders sticking it to hedge funds – but has evolved over the last week to something much more – and has been making headlines everywhere – in this episode – want to give a quick recap about what is going on, between the initial rise of the GME shares, the market interference by Robinhood, why this went on and the greater market implications, looking at short selling and hedge funds in general – so lots to covers   To start with – what is the GME story - GameStop – GME – brick and mortar game retailer – owns EB games GME price history – Over the years brick and mortar retails have lagged behind – Steam, amazon, many online gaming services – Back in 2013 the price was around $50 USD – by

Welcome to Finance and Fury. This episode on about how to invest in Asian markets and how to avoid some of the biggest pitfalls in these markets – I have covered the Aus market, and the US market in detail, but haven’t covered much on a giant portion of investments that are available – that is Asian markets Why would you want to invest? Number of people in this region is around 4 to 4.5 billion people – or over 50% of the world population Along with this – comes the companies that provides goods and services to these individuals Has the potential for market returns – how? Companies performances are based off supply and demand - Diversification – considered emerging markets – has growth potential that isn’t as correlated to issues in the west   Countries – and their respective markets – go through the list – some of the market caps may be a little old - hard to get up to the minute data on these Tokyo Stock Exchange – Japan - June 2020, the exchange had over 3,700 listed companies, with a combined 

Welcome to Finance and Fury. Positive wealth mindset, or a growth mindset for your finances To start with – lets imagine that you’ve hit the lotto jackpot! Say you win $20m – it is a lot of money – enough for any person to reasonably retire on So, now that you may be able to be considered FI - what are you doing with your time? Where are you living? And how are you living your life? This might be pretty hard to actually think about for some people - it depends on much time you’ve actually spent thinking about it before If you had $20m of financial resources at your disposal - how would you spend your time? and what would you do? and would all your problems be solved? For a lot of people – these aren’t the focus when it comes to fantasising about winning the lotto – it is on how this $20m would be spent The same goes for FI in general – the focus can be solely on the target of what we need to retire – and not on the rest of the picture – what we will be doing – This is where having a mindset not only to f

Welcome to Finance and Fury, I hope you are all going well. Today we will be going through how to avoid financial distractions. This episode is a little bit of a follow up from the previous - as one of the comments I made was a little oversimplified – that was that if you simply spending less and invest these funds – you can achieve more in your financial future – It is not as easy as it sounds – it is very easy to say to someone spend less and invest more – but to actually achieve this as part of a goal can be almost impossible without the right tools to reduce discretionary or non-essential spending So in this episode – we will outline some of the core reasons behind spending habits and some ways to hopefully hack these in your own lives to help reduce needless spending and instead redirect these funds into towards your financial futures When I talk about spending - Not talking about needed or essential spending- but those additional spending items that can be made on impulse rather than as part of a plan

Welcome to the Finance and Fury and the new year, 2021. Hope the start to the year has been good for you all – as in this episode we will be looking at how to work on your financial goals through the year through turning these into daily habits Last episode - Stared off with a question; looking back on the year, are you in a better or worse financial position? We also went through some foundations on setting goals – but importantly – narrowing these down to 3 major goals that are of your top priority The reason for narrowing this down is due to the topic of todays episode – that is actioning them You can set all the goals in the world – but to be in a better financial position this time next year – you need to be able to implement these – through taking some action based around the plans that you set – to make sure you’re always moving forward.   Time can be broken down into the following: Past – What has gone on – All of your life events to this point Dictates a few things – Behaviours and habits We

Welcome to Finance and Fury. I hope you all had a good Christmas – if you are like me might be a few kg heavier. This episode – be looking at making new year plans – new years is upon us – many people have new years resolutions. To start with - looking back on the year, are you in a better or worse financial position – been a tough year for a lot of people But in todays episode - how to be in a better financial position this time next year Going to look at how you can always be ahead on finances compared to last – through planning and then next episode is about how to act on those decisions Because - like compounding of investment returns over the years, the little things you do in your own personal life compound over time as well This can occur in both directions – both backwards and forwards   What are your financial goals for this year? Or new year resolutions? Maybe you haven’t thought about them yet – the new year may be a few days away – or already occurred by the time you listen to this – either

Welcome to Finance and Fury. This episode is about what is momentum investing and can this be the best investment strategy in a world where fundamentals mean nothing?   Over the past few years – value managers – or those that try to estimate the fair value of a company and base their purchasing decisions around this have struggled to provide alpha – Alpha is the returns above the benchmark – or the index – and those active managers trying to provide value through buying undervalued companies – or those that have had short term losses – so their prices are below their fair valuations – have failed to see the rebound in prices expected from following this strategy So returns have been minimal One alternative strategy which has provided better returns over the past few year on average has seemed to be buy those companies not based around fundamentals but with momentum – i.e. what others are buying and hold these for a while to ride the wave up   What is momentum investing - is a system of buying shares t

Welcome to Finance and Fury – Vanguard bringing in some disruption to Australian markets - If you haven’t heard of them – Vanguard are the world's second biggest asset manager – dealing in index funds and ETFs Vanguard – have almost $9 trillion of funds under management world wide company's incredible rise since being founded in 1974 by investor Jack Bogle – providing low cost access to indexes – originally with managed funds but recently been branching out into ETFs But they have recently been branching out into platform services on top of asset management – little while ago - came out with the Vanguard personal investor platform Low cost account to access Vanguard investments - an Account Fee of 0.20% per annum, based on the total portfolio value of your account, including any cash held, capped at $600 per annum, per account A lot of the wholesale funds have high minimum buy ins – about $500k in some cases – so going through a platform gets around this – was third party platforms but Van have come out wi

Welcome to Finance and Fury. Today we’ll look at how to get the right investments in super. Because super funds take care of it for people – a lot of people don’t pay attention – so in this episode want to explain what to look for and how to help determine if your investments in super are appropriate – Not advice – seek advice if you are unsure What is super? Most people think of superannuation as just something your employer pay in to so that when you turn 60 you can access it. Even though your employer pays into super, that is your money! 9.5% on average don’t care and why would you right? out of sight, out of mind and decades away from becoming relevant. Technically – superannuation is just a vehicle for investments that are held in a concessionally taxed environment Like having an investment account that pays only a 15% tax rate on income when compared to your marginal tax rate The only downside – is the preservation rules – where you can access it if you desperately need the funds   There are dif

Hi and welcome to Finance and Fury. Just a quick announcement today. Only going to be doing Finance and Fury Monday episodes for the rest of the year. There is a lot going on with work and life in general and I just need to cut back a bit on the episodes. Had to make a decision on which episodes to cut out, so will still be doing the Monday episodes focusing on personal finance. If you send a question through – might not be answered for a little while Just wanted to let you know Speak to you next week for the Monday episode.

Welcome to Finance and Fury. This episode will be about using your own home as part of a wealth accumulation strategy Some strategies that I plan to do First – what is a home – a lifestyle asset – is still technically an asset as it has a value – as long as someone else is willing to buy it off you I personally have never really seen a home as a financial asset - it technically losses you cashflow when it has a mortgage – and even when it doesn’t from a mortgage if this has been repaid – with rates, body corporate, ongoing maintenance costs for upkeep on the property Classification – Can you live off it? anything that doesn’t make you a passive income but instead loses you cashflow cant be used for financial independence Property ownership is expensive – mortgage is normally the biggest expense – PI loans eat a lot of cashflow – but the P component can be treated as forced savings that you can’t use But does decrease your I payments over the long term However – whilst your own home is a lifestyle as

Welcome to Finance and Fury, the Furious Friday edition.  In this episode we will look at the concept of a one world currency and if one single currency could actually work for the world? There has been an increased level of discussion around this topic over the past few years – especially with central banks looking to adopt digital forms of currencies over the next few years However – these are based on the individual country’s central banks - There are about 195 countries – depends on who you ask – but working off the UN numbers – there are 195 At the same time - There are 180 currenciesrecognized as legal tender in United Nations (UN) member states Abut 15 of these UN recognised nations use some other nations currency already as their legal tender – like the USD as the global reserve currency However - excluding the pegged (fixed exchange rate) currencies of the 180 – which there are about 50 – which also peg themselves to the USD - there are only 130 currencies which are independent or pegged to a curre

Welcome to Finance and Fury, the Say What Wednesday edition, every week answering your questions. This week we answer Stephen’s question: “Hi Louis, I saw an article about purchasing a home inside of a family trust for asset protection. I’m just wondering if you have seen this done before and if you think it is a good idea?” Thanks for the question – this episode – look at purchasing your own personal place of residence inside of a family trust – and what the pros and cons of this strategy are - because in short – it is definitely possible to do, but if not done correctly – it can put you in a worse position Quick note – I’m not a legal expert – if you are considering this – important to get expert advice on this – this episode will just be discussing the general gist of the concept – and potential ways to avoid some of the major cons   Firstly - What is a family trust – or discretionary trust – family trust refers to a discretionary trust set up to hold a family's assets – set up as a different owner of ass