December Performance

Good news: Stock selection continues to support performance with our international portfolio outperforming a falling world market. Bad news: Statistically, December was the worst month so far for our Tactical Portfolios. Perspective: A 3-day fall in global shares (priced in AUD) between Christmas and New Year was the only reason for the negative performance, and this reversed quickly after New Year to leave global shares well above November levels.

World index in AUD
Source: Factset, Nucleus Wealth

With the benefit of hindsight (and measured over far shorter periods than we would ever like our mistakes to be evaluated over!), the decision we made in November to sell down and take some profits in our equity positions was timely, and the decision to add most of those positions back at the start of January was even more so.

But we are clearly playing with fire, this late in the cycle. Our tactical asset allocation continues to be based on getting as much exposure as we dare to over-valued equities that continue to get even more over-valued while maintaining protection in case it all unravels.

Undoubtedly over the next 6-12 months, we will either regret (a) not owning enough stocks if the stock market careens higher or (b) owning too many stocks if the day of reckoning arrives earlier than we expect.  For now, we are of the belief that our portfolios have the right mix to minimise both regrets.

Continue reading “December Performance”

Bracing for a near term melt up

I wanted to follow up on Jeremy Grantham’s comments from yesterday and run through some of GMO’s asset allocation views from the perspective of an Australian investor.

Jeremy Grantham & Co. at GMO have put out two thoughtful (as always) pieces in the last 3 weeks. I rate the team there highly and so when I have a different view I take that as a sign that I need to go back and triple check all of my assumptions.

Continue reading “Bracing for a near term melt up”

Stocks to short for your grandkids

Richard Bookstaber recently put out an interesting post on sectors that he thought had problems on a 30-40 year view.  Richard is the author of a number of good finance books – I liked A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation and I have his new one The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction on my reading list. 

Besides writing books with extremely long titles, he also works for a pension fund, and so likes to talk about very long-term outlooks and risks Continue reading “Stocks to short for your grandkids”

November Portfolio Performance

Nucleus November performance

One of our core investment themes is that international stocks are the best asset class for Australian investors at this point in the cycle. To date, this has been the right call, with our international portfolio increasing over 13% over the last 4 months on the back of a weak Australian dollar, favourable stock selection and strong international markets.

Last month we posed the question of whether its time to switch to a different asset class. In November we changed our answer to that question. Continue reading “November Portfolio Performance”

The Australian SMSF Landscape

The Australian SMSF Landscape

We recently ran a webinar entitled the SMSF Asset Allocation Master Class in which, as an introduction, I thought I might provide a snapshot of the Australian SMSF landscape. The following graphs have been be created from an ATO dataset who publish SMSF statistics quarterly, the most recent being Jun 2017 which was released a couple of weeks ago.

  Continue reading “The Australian SMSF Landscape”

Ethical Investing

Ethical investing is frankly confusing. There are plenty of good products, but also a number of products whose promoters may not be as ethical as the stocks they invest in…

For me, there are three key issues:

  1. What is the effect on investment performance
  2. How are the stocks chosen
  3. What are the fees

Read on for a summary of how I look at ethical investing, or you can watch the video. 

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October portfolio performance

Nucleus October Performance

One of our core investment themes is that international stocks are the best asset class for Australian investors at this point in the cycle. To date, this has been the right call, with our international portfolio increasing almost 10% over the last 3 months on the back of a weak Australian dollar, favourable stock selection and strong international markets.

The question going forward is whether its time to switch to a different asset class. At this point, the answer is Continue reading “October portfolio performance”