Investment Matters

Reflections on the start to the year

Clients will have received their quarterly commentary during the Investment Matters' summer hiatus.  An overview of company news and announcements (subsequent to the pre-Christmas IM edition) from investments in your equity portfolio is provided below. 

Your Investment Team’s reflections on the current market environment are twofold:

Firstly, there are many investments in your portfolio that are undervalued.  We have seen some investments become ‘cheap’.  Then they have moved, somewhat surprisingly, to be even cheaper – generally lower P/E stocks tend to be more resilient in market corrections. 

But when the market doesn’t appreciate value, others will.  In other words, share prices will revert to better reflect a company’s intrinsic value.  Or outside parties will make a takeover bid.  The pertinent current case in point is Healius (formally Primary Health Care).  More on this above.

Secondly, although it has been a positive start to the calendar year (All Ordinaries XAO +4.0% for Jan-19), we expect the volatility experienced later in 2018 to continue.  Numerous local and global macroeconomic and political factors will be the cause of this.  As always, being focused on individual investments and acquiring them for favourable prices with a 3-year investment horizon is, based on our past experience (including through the GFC), the best strategy for volatile times.

- Fleur Graves