- Equities
Green Mining
22 Oct 2021 |
By Max Pacella
READ TIME 4 mins
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Insights
The latest market insights from our strategists covering equity
and fixed income markets, and a global macro overview.
Equities
Back to all insights“Green Mining”. Though the term sounds like an oxymoron, the concept of environmentally friendly mining has been touted for a number of years as a way to potentially add longevity to dirty industries which are rapidly losing favour with consumers...
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Over the past two weeks, oil and gas have hit 7-year highs, while coal has hit all-time highs. For some in the market, this may have come as somewhat of a shock – aren’t we supposed to be transitioning away...
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The US banks set a positive tone last week for US Q3 earnings. In this note we look at how it will unfold; so far more SP500 companies are beating EPS estimates than average and they’re doing it by a...
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- Equities
Re-Opening Trade: Domestic Healthcare
14 Oct 2021 |
By Mike Young
READ TIME 5 mins
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COVID-19 can be viewed as one of the largest points of inflection in our modern society – where there has been a significant shift in thinking towards a greater prioritisation of one’s health. The Australian nation that is re-opening is...
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- Equities
Re-Opening Trade: Domestic Travel, Food, and Leisure
12 Oct 2021 |
By Max Pacella
READ TIME 6 mins
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This morning represents 24 hours since NSW took the first step in re-opening, stepping bleary-eyed out of our homes into a week of wind and rain – but at least it’s fresh air. As our eastern seaboard tentatively finds its...
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As governments around the world continue to loosen restrictions, the travel industry stands out as one of the most significant beneficiaries of the international re-opening trade. When looking into the main players within this space internationally, a trend is clear...
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The manipulation and editing of DNA is a field of study which can be quite divisive in conversation. On the one hand, we are exploring new frontiers of scientific technology, opening up pathways to cures and treatments which were considered...
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- Equities
Outlook for Australia’s Base Metals
05 Oct 2021 |
By Darren Letts
READ TIME 4 mins
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Citibank’s commodity team recently reviewed its price forecasts and the impact for stocks in their coverage. Following on from last week’s conference call for Mason Stevens clients we review those conclusions.
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- Equities
FAAMG is hard to say but it’s been harder to stomach if you haven’t maintained exposure
30 Sep 2021 |
By Darren Letts
READ TIME 5 mins
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Facebook, Amazon , Apple , Microsoft and Google are now the largest companies in the SP500. Can the market head higher despite the dominance of their business as we head into a post pandemic environment?
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- Equities
EQT/IRESS: The Takeover that Could Have Been
28 Sep 2021 |
By Max Pacella
READ TIME 5 mins
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Earlier this month, we saw one of the key mergers and acquisitions (M&A) in Australia fall over, as Iress (IRE:ASX) ended talks with Swedish private equity firm, EQT. Terminating a process started in June this year, the Australian financial software...
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Welcome to the first day of Spring – and appropriately enough for a traditional time of growth and harvest, let’s discuss food. Throughout history, the development of our society has been based around our “physiological needs”, which Abraham Maslow described...
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It’s hard to argue that countries with younger demographics, lower public indebtedness and without legacy technology have longer growth runways ahead of them; we’ve known about the opportunities in emerging and frontier markets for years and decades already. The hardest...
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Uranium is in an interesting spot at the moment – pun intended. At time of writing, spot uranium is trading at US $44/lb, levels we have not seen since late 2012. Even still, this is only half of the price...
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The European region can never be accused of being a stable presence – a melting pot of culture with a history dating back to some of the earliest of civilisations. And in recent history, European equity markets have been a...
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- Equities
August 2021 Reporting Season: An Overview
09 Sep 2021 |
By Max Pacella
READ TIME 5 mins
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Australia has put yet another reporting season behind us, one steeped in uncertainty which was eerily reminiscent of this time last year – uncertainty around COVID outbreaks, lockdowns on the eastern seaboard, all the greatest hits. Today we will look...
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As we close out earnings season, we have time to look back on one final area of the market: property. A national past-time, residential property in particular captures our attention and desire arguably more than any other physical asset –...
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- Equities
Reporting Season – Energy Sector Update
02 Sep 2021 |
By Darren Letts
READ TIME 4 mins
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Looking at your energy bill you’d be thinking that’s a sector worth investing in. It hasn’t been and consolidation is the theme going ahead. Year to date it’s a 22% underperformance, despite a solid performance from the underlying commodities. Can...
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I really like analysing utilities, as they tend to perform like bond proxies providing regular income (most of the time), where a substantial portion of their business comes from regulated activities with high degrees of certainty. However, we’d be remiss...
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- Equities
Reporting Season – Information Technology Update
31 Aug 2021 |
By Mike Young
READ TIME 5 mins
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The earnings season is nearing completion, and there has been a clear outperformance of growth over value. Some of the greatest upside surprises have come from the Information Technology industry, which should come at no shock given the impact of...
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- Equities
Reporting Season– Telecommunications Update
25 Aug 2021 |
By Mike Young
READ TIME 4 mins
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The Delta variant and Chinese restrictions on iron ore imports has created an uneven earnings season, with some companies flourishing amidst lockdown restrictions, and others being impacted by increasing uncertainty. Within the telecommunications industry, results have been mixed, however significant...
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- Equities
Reporting Season- Materials Update
24 Aug 2021 |
By Darren Letts
READ TIME 4 mins
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Concerns over slower economic growth sent oil and metals prices tumbling, oil as measured by WTI crude is 16% off its July high. However that is nothing when compared to the collapse of our largest export - iron ore. Any...
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If you distil the primary purpose of each corporate spending decision down to one fundamental principal, it should be to deliver at least one dollar of value (be it intrinsic or market value) for each dollar of business capital deployed....
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One key area that many of our investors are interested in is small companies, or “small caps”, both domestic and international. In terms of domestic markets, we define the S&P Small Ordinaries as companies within the ASX 300 but below...
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Even for the most digitally inept of us, the amount of time we have spent online has gone up. This has enforced lifestyle changes which will likely be irreversible, where in the past, onboarding into the more efficient digital world...
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We have written about global healthcare trends in the past – healthcare is a logical theme to consider in a portfolio if you think it’s reasonable that people want to live longer lives with better treatment, particularly as they grow...
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We published a morning note on 28-July outlining the likely outperformance to be received from the likes of CBA and NAB and the potential for large share buyback programmes to commence, creating a strong short-term positive impulse for their share...
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Web 3.0 will serve as one of the most important technological developments of our generation, and promises a more secure and efficient internet, operating through peer-to-peer (P2P) networks which don’t require third parties. No longer will Facebook and Google be...
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Many reading this note may remember a time before the internet, when the term “information superhighway” was used unironically and the most complicated pages out there were static text documents with some coloured text. The evolution of what we now...
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- Equities
Fintech: Making Finance Exciting Again
06 Aug 2021 |
By Mike Young
READ TIME 5 mins
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Fintech seeks to disrupt traditional financial systems through the creation and implementation of innovative technology solutions, intended to increase efficiency, generate synergies, and improve the customer experience. What Fintech offers is the provision of financial services made mostly in conjunction...
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- Equities
Why Oil & Gas Could Be Set for Another Bull Run
03 Aug 2021 |
By Mike Young
READ TIME 6 mins
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The need to transition to more renewable energy sources is a challenge which is paramount to the survival of the human race. However, the transition requires the development and acceptance of technologies able to efficiently supplant both existing energy needs,...
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The “re-opening trade”, or the strategy of investing in stocks which are widely held to be beneficiaries of an economic re-opening after the COVID-19 pandemic, has been in play largely since late Q2 2020. Predicated on a rebound of earnings...
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Afterpay (APT: ASX) is one of the true ‘disruptor’ stories of the last decade, an innovative business model taking market share from traditional consumer credit lenders and creating an ASX 20 company in the process. If we talk in terms...
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Our domestic banking landscape has changed since COVID first impacted our economy last year, where banks were forced by regulators to retain more capital, while our yield curve flattened detracting from net interest margins, and lending volumes plummeted. As 2021...
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As consumers continue to transition away from cash, the payments ecosystem is becoming increasingly more integral to our global economy. Apple Pay has rose to prominence, capturing 5% of the global digital payments market through its contactless payment method, with...
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Graphics Processing Units (GPUs) serve as one of the only constants within the technology of the now, and that of the future. Despite previously used only for generating computer graphics, they are now set to play a key role in...
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Working from home (WFH) is by no means a recent phenomenon, where the movement has grown in popularity ever since the 1970s as female workforce participation rates increased. This trend gained speed as technology developed, making it more practical, and...
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5G now covers more than 2,700 suburbs and over 200 cities and towns across Australia. You’ll need a 5G device and a 5G-ready mobile or data plan to connect but the transition that will allow all the other hyped technological...
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“Let me be surrounded by luxury, I can do without the necessities!” In recent notes we’ve touched on the market outlook that people are getting wealthier, not disregarding the incentives by governments to spend through various stimulus measures, and that...
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If you want an exercise in futility, try Googling “investing in exchanges” and try to find any commentary on buying a stock exchange, rather than just “how to buy stocks on an exchange”’. You could of course try, “why buy...
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Our lives are becoming increasingly lived through technology – whether it’s social media, mobile phones, email, video conferencing or video games – and as this trend continues, increased demand for better products and services has provided ample investment opportunities to...
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- Equities
Risk-Off Series: Rotation Into Value/Quality
30 Jun 2021 |
By Mike Young
READ TIME 3 mins
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To date, our risk-off series has focused largely on investments which are inversely related to market sentiment, and as a result may only be suitable within short-medium term time frames. These solutions may also not be suitable for those investors...
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In extreme situations, humanity relies on three immediate “basic needs”: • shelter, • clothing, and • food. With the continual growth of our population across the globe - coupled with concerns about the impact on our agricultural land from over-farming...
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3D printing offers a glimpse into the future, where manufacturing and transport networks could be completely overhauled through on-demand, mobile and flexible production channels. Whilst the industry has been in existence for decades, recent developments have made mainstream adoption increasingly...
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- Equities
Risk-Off Series: Investing in Long/Short Equities
16 Jun 2021 |
By Max Pacella
READ TIME 4 mins
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In the multitude of notes we’ve written about equities, most will make a basic assumption that we are ‘long’, i.e. we are buying the security or fund with the view that the market is going up. But what if we...
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Resources (‘Materials’), making up ~16.75% of the ASX (Bloomberg), has seen a particularly successful run over the last year, outperforming the ASX 200 index by just over 10%. The sector has historically been a very ‘boom or bust’ area of...
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As the COVID-19 vaccine has been rolled out around the world, investors have flocked towards the re-opening trade - where improved economic growth outlooks would see certain industries outperform. More broadly speaking, this has also involved a move from growth...
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In our Healthcare note a few weeks ago, we outlined the merits of investing into the sector from the point of view that the world is getting wealthier and older. As we get older, we spend longer ‘living with disability’...
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The father of value investing, Benjamin Graham, proposed in his 1949 book “The Intelligent Investor” that “chief losses to investors come from the purchase of low quality stocks..” Seventy years later this statement remains relevant, where even during the largest...
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Have you ever asked yourself why a certain company does not pay dividends, even when they are extremely cashflow positive? Furthermore; if a company whose success, share price growth and stratospheric valuation is based on accelerating earnings growth, what does...
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All of these statements confirm one simple idea, that the momentum of markets is a critical factor to consider in the positioning of your portfolio. If you want the quintessence of momentum trading in one sentiment however, I would go...
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The short story is they look for a margin of safety before putting your money to work that should protect them in market downturns. Ben Graham only bought stocks when they were trading at two-thirds or less than their intrinsic...
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Growth investors have enjoyed a stellar decade, supported by an equity bull market and record low interest rates. However, with increasing inflationary expectations and lofty growth stock valuations, investors have begun to rotate into other areas of the market. In...
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Private equity (PE) is often one of the most opaque and inaccessible investments, frustrated by three main issues; transparency, accessibility and liquidity. It is often difficult for an investor to pick the winners out of a vast majority of private...
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The investment theme of Healthcare may carry some of the strongest emotional links in capital markets – it does not get much more sentiment-driven than considering our own quality of life and mortality. Today we will examine the global healthcare...
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With Afterpay dipping below $100 for the first time since December 2020, commentary has re-entered the market around the value of Buy Now, Pay Later (BNPL) companies in general and the regulatory risks for this disruptive business model. Today we...
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The relationship between precious metals and inflation has been shown empirically in the past, including gold and the ‘white metals’, being silver, platinum and palladium. These are also “real assets”, physical pieces of ‘something’ which we believe to have some...
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- Equities
Positive Energy Part 3: Geothermal and Nuclear
04 May 2021 |
By Max Pacella
READ TIME 6 mins
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Concluding our green energy series, beginning with solar and discussing wind & water last week, today we examine the market, science and investible opportunities across geothermal power and nuclear energy as they exist today.
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The stock market adage “sell in May and go away” is based on the centuries old seasonality that London’s financial district went on hiatus from May to September each year, where stock market gains were concentrated in other months, October...
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As of late, the terms ‘short squeeze’, ‘call options’ and ‘gamma’ are ingrained into the minds of market observers after the GameStop saga. There are lessons to be learned from squeezes, including what signals them and what market they thrive...
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- Equities
Positive Energy Part 2: Wind and Water
27 Apr 2021 |
By Max Pacella
READ TIME 4 mins
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Continuing our series on renewable energy investing, today we look at the opportunities across wind power and hydroelectricity.
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We’ve spent time discussing electric vehicles (EV) and the investable opportunities of their supply chain – but today we look to the technology which seeks to solve one of the largest problems our society faces today: power. Battery technology has...
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Gambling predates almost everything known in human existence, with the first instances of gambling recorded in the Stone Age – almost 3.3 million years ago. Since then, it has evolved dramatically to become a USD $465 billion-dollar industry. In today’s...
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Continuing on from our EV note from last week, today examine investible opportunities across the entire supply chain – both as a focus on EV and a template to understand investments into other high tech themes. Knowing what you own,...
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As a society we are witnessing a paradigm shift towards de-carbonisation, moving towards an increased usage on renewable energy sources and improving technologies across solar, wind, hydroelectric, geothermal and nuclear power. In the first of a three part note on...
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Deliveroo’s recent IPO was the worst in the history of the London Stock Exchange, falling 26% on its first day of trading. With structural tailwinds driving competitor share prices higher and higher throughout 2020, what exactly went wrong? In today’s...
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After being a minority player in the auto industry for over 100 years, electric vehicles look set to re-enter the global stage as a leading alternative to combustion engines. As governments around the world look to cease the sale of...
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When considering the domestic equity exposure in a portfolio, one important consideration is what market capitalisation you are investing into. Much like different nations of varying economic size, different sizes of companies within the same economy offer different investment characteristics....
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For the last month financial market commentary, when not discussing the merits of Bitcoin, has been focused on how the tech sector which has lost its performance lead and the rotation from Growth to Value has accelerated, triggered by rising...
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Momentum is important, it makes movement easier. For the Australian equity market, the momentum was driven by the earnings recovery that a successful vaccine rollout would create post lockdowns globally coupled with the valuation expansion falling interest rates allowed. These...
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The equity market is the subject of a lot of polarization at the moment. In the minds of many vocal commentators, everything is either the next “big bull run”, or another sign of a bubble. Valuations are either stretched beyond...
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- Equities
Implications of a rising AUD on ASX shares
12 Feb 2021 |
By Mike Young
READ TIME 4 mins
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The AUD/USD has appreciated by 33% since March 2020 and has brought foreign exchange (FX) risk into the forefront of the minds of investors looking at US equity and fixed income markets. We have discussed the factors which have driven,...
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Yesterday, Commonwealth Bank (CBA:ASX) was the first of our major banks to report 1H21 results, firing the starting gun on what will be several weeks of news coming out of the largest ASX sector. In light of this we thought...
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We tend to overconsume things that have no monetary cost. In economics, we call this the “free rider problem” where consumers do not value the inherent costs and benefits of things that are free. Think about it yourself, what is...
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Swipe, swipe, partner for life…? Dating apps have revolutionised the dating industry, with the advent of Tinder in 2013 flipping the script on existing matchmaking services by placing the onus on users to pick and choose from singles in their...
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- Equities
Healthcare Sector Overview and Outlook
04 Feb 2021 |
By Max Pacella
READ TIME 5 mins
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It is undeniable that COVID-19’s impact upon our society and economy will be felt for decades to come. We are living amongst at an inflexion point in history, in which certain priorities have been brought into focus as the pandemic...
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- Equities
Exposure to Cryptocurrency Through Stocks
03 Feb 2021 |
By Max Pacella
READ TIME 4 mins
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Much like any other designated ‘financial services guy’ in a circle of friends, if I had a dollar for every time I have been asked about buying “cryptos”, I could probably afford one whole Bitcoin. Cryptocurrency has become the investors’...
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As we all unwind after this tumultuous year, many of us will turn to music to relax and celebrate. But do we ever stop and consider the growth and change in how we consume that media? Or even, how can...
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“Could we have kippers for breakfast,Mummy dear, mummy dear,They got to have ‘em in Texas,‘Cause everyone’s a millionaire”Supertramp, “Breakfast in America” Not chasing hot picks and waiting to ‘buy the dip’ is generally the sage advice that an experienced stock-picker...
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“I’m gonna keep on the runI’m gonna have me some funIf it costs me my very last dimeIf I wind up broke, oh wellI’ll always remember that I had a swingin’ time”Elvis Presley, “Viva Las Vegas” Now more than ever,...
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It is well known that certain companies, such as the mega-tech FAANG stocks, are trading at valuations that are high relative to historical averages. If you’re wondering why – there are two main answers. Investors and traders believe the valuation...
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- Equities
Ant Group – The Biggest IPO in History
29 Oct 2020 |
By Max Pacella
READ TIME 7 mins
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“Today’s financial system is the legacy of the Industrial Age – We must set up a new one for the next generation and young people. We must reform the current system.” Jack Ma, Co-Founder of Alibaba on Ant Group In...
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As a daily commuter, I have noticed how social distancing has changed the overall travel experience. The commuting public that shares the same routes as I have, prioritised health through face mask wearing, and there’s less music, tablet watching and...
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