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Monday, 17 February 2014 01:17

US Recovery – It’s real!

There continues to be much skepticism among the general public about the recovery of the US economy.

US-4-Budget-Position

In this article, we provide a series of charts that show that the US recovery is very real.

Further evidence can be seen in the US share market.  During the most recent company reporting season we saw 68% of companies in the S & P 500 beating earnings expectations.

The next chart shows the average monthly employment growth – note that a number of 200,000 new jobs is required to lower the unemployment rate.

US-2-Employment-Growth

The US Housing market has a multiplier effect throughout the economy both in terms of employment as well as consumer spending.  Activity and prices have most certainly turned as can be seen in the chart below.

US-3-Housing-Market-Recovery

The US Budget position has dramatically improved as economic activity has turned.

US Corporates are also in good shape – earnings have beaten expectations and their balance sheets are in good shape.

US-4-Budget-Position

DISCLAIMER: The above information is commentary only (i.e. our general thoughts).  It is not intended to be, nor should it be construed as, investment advice.  To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.  Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and circumstances.

This entry was posted in Debt Crisis, Investment Advice, Self Managed Superannuation, Superannuation and tagged , , , by Mark Draper. Bookmark the permalink.

Monday, 17 February 2014 01:17

CSL – Company Update – January 2014

CSL has long been a company we have liked.

Mark Draper (GEM Capital) talks with Daniel Moore (Investors Mutual) about some recent developments with the company as well as an important accounting measure that investors should be aware of when valuing CSL.

DISCLAIMER: The above information is commentary only (i.e. our general thoughts).  It is not intended to be, nor should it be construed as, investment advice.  To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.  Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and circumstances.

 

This entry was posted in Investment Advice, Self Managed Superannuation, Shares and tagged , , , , by Mark Draper. Bookmark the permalink.

Wednesday, 12 February 2014 05:24

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Wednesday, 12 February 2014 05:17

Comedy Corner

We have dedicated this section of our website to the lighter side of the financial world.  We hope you enjoy this collection of footage and if you have anything you believe would fit into this section, we would love to hear about it. 

 

US Debt Ceiling

If it weren't so serious, the raising of the US Debt Ceiling affair was truly laughable.  Here is a satirical look at it

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banned iPhone 5 commercial

A satirical send up of Apple's advertisement of iPhone

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Prime Mortgages - The cause of the Global Financial Crisis Explained Simply

Two UK comedians discuss the true causes of the Global Financial Crisis in a very satirical fashion.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Counselling Commercial

An amusing commercial promoting investment counselling - unexpected ending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banned Life Insurance Commercial

Produced by UK comedians, an amusing life insurance commercial that clearly would not make it to mainstream media. Great British comedy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Commercial

Very funny commercial about from Mortgage Company set in a hospital

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing into Soft Commodities (alternative view)

2 minute video about the reasons why investors should consider farming from UK comedians (Warning: some coarse language in this video)

 

 

Wednesday, 12 February 2014 05:17

10 Investment GEMs for 2014/2015

Investors are rewarded for making good choices.  Good choices involve what they will invest in, as well as identifying the areas they avoid.  Here is our list of good ideas to profit from and some areas to tread carefully.

 

Chinese-Smartphone-shipments

Smart Phone Proliferation to continue in 2014.  It is estimated that China and India are to purchase 500 million new smart phones in 2014.  Investors should think about how they can profit from thisphenomenal growth that is just not possible from within the Australian phone market.

There will be winners and losers from this consumer change including chip makers, phone manufacturers, social media platforms and other software providers.  While identifying the winners from losers will be difficult the upside to this growth is potentially massive.

 

$AUD likely to continue trending lower.  The US economy is showing signs of recovery and the US Federal Reserve has indicated that it will now start slowing down the Quant Easing program.  This is likely to result in the US dollar becoming more attractive to investors, which also results in the $AUD falling relative to the US dollar.  Other factors that are likely to put pressure on the $AUD include low domestic interest rates, domestic economy under pressure and falling commodity prices.  Investors can consider investing in International funds that are not hedged as well as companies that have earnings in US Dollars.

 

Retail Property under pressure – In the year to November 2013, Australians spent $14.6bn on online retail, which is equivalent to 6.4% of spending with traditional bricks and mortar retailers according to a NAB survey.  (excl cafes and restaurants).  Growth rates of online retail sales are far higher than traditional retailers.  Australian consumers are also highly leveraged.  This leads us to be cautious on investment in retail property and existing holdings both direct and listed should be reviewed.

 

Chinese system remains under great stress.  Many well regarded investors including George Soros and locally Kerr Neilson (Platinum Asset Management) have suggested that what has worked to promote Chinese growth in the past, is now under huge stress and that the rate of lending growth is unlikely to be sustainable.  A lending slowdown in China (read banking crisis) would most likely result in a slowdown in economic activity in China, which would also probably result in a slowdown in Australia given the significance of China as a trading partner.  Australian investors should pay close attention to China, particularly bank shareholders and residential property owners.

 

Obamacare may result in many more accessing Healthcare in the US which could prove to be very positive for some healthcare companies with exposure to the US.  By means of an example, Sonic Healthcare, an Australian company is the third largest pathology provider in the US and could benefit from an increase in patients seeking additional tests.

 

China’s economy is changing from one that is dominated by fixed asset investment (such as building apartments, roads etc) to one that has more emphasis on the consumer.  One of China’s goals is to double wages over the next 5-10 years which has the potential to dramatically change spending patterns by Chinese consumers.  China’s reduced fixed asset investment is likely to have a material impact on their demand for steel, coal and other materials.  Chinese consumers on the other hand are vast in numbers and to date have spent far less on consumer goods than their Western counterparts.

Inbound TourismInbound tourism into Australia to benefit from a falling $AUD– In bound tourists coming into Australia is likely to accelerate with a falling $AUD.  It has been projected that an upswing of Chinese tourists is highly likely in the future with the increase in wealth in China.  While many beneficiaries of increased inbound tourism are privately held tourism businesses, there appear to be several listed businesses that are likely to benefit from stronger Australian inbound tourism. (Figure 13 sourced from Tourism Research Australia (Aust Govt) – Spring 2013) 

 

The global population is ageing.  This is a global phenomena that has not been witnessed before in modern history.  As people age, their demand for healthcare services naturally rises.  In Australia the percentage of the population over 60 in the year 2000 was around 16%, and by 2025 it is forecast to be around 25%. In the US the percentage of their population over age 60 is also forecast to rise to around 25%, up from 16% in 2000.  (Source UN paper – Global aging 1950 – 2050).  There are many excellent healthcare companies that are likely to profit from the ageing of the population.

 

US Federal Reserve unwinding Quant Easing.  The US Federal Reserve have indicated that they will start to reduce the ‘money printing’ program from $85bn per month.  In terms of basic supply and demand fundamentals, this means that the US are looking to reduce the supply of money.  Generally when supply of a commodity is reduced, its price rises.  The price of money can be measured by interest rates, therefore it can be argued that as supply of money is reduced, interest rates should rise.  The effect of rising interest rates could be dramatic as this can affect asset values as well as consumer activity.   Investors must pay close attention to this development – we have produced several videos on this topic which can be found on GEM Capital’s YouTube channel.

Australian Banks are highly leveraged to the residential property market in Australia, which many respected investors such as Jeremy Grantham (GMO) describe as expensive.  With the strong run in bank share prices in recent times we are suggesting that investors review the proportion of their portfolio that is held in Australian Banks.  Contrary to popular myth, Banks are highly leveraged businesses and vulnerable to downturns in the economy.  We would encourage investors to aim to set a portfolio limit of no more than 20% of their share portfolio in Australian Bank Stocks at the present time.

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. We strongly suggest that no person should act specifically on the basis of the information contained herein, but should obtain appropriate professional advice based upon their own personal circumstances including personal financial advice from a licensed financial adviser and legal advice. Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306

Wednesday, 12 February 2014 05:16

Aged Care Information

 

Summary of Age Pension Entitlements

 

To qualify for Age Pension, you must satisfy age and residence requirements.  How much Age Pension you will get, depends on your income and assets and other circumstances.

 

Women born before 1 January 1949 reach qualifying age at 64.5

Women born between 1 January 1949 and 30 June 1952 reach qualifying age at 65.

Men born before 1 July 1952 reach qualifying age at 65.

 

Below is a table showing the payment rates of Age Pension (as of March 2014)

 

 

 

 

 

 

 

 

 

 

 

 

 Below is a table outlining the basic Assets Test (current as of March 2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 With respect to the Income Test, Single pensioners are allowed to earn $156 per fortnight and still receive the full pension.  Married couples can earn up to $276 per fortnight combined and still receive the full pension.

Below is a table showing the amount of income allowed before the pension cuts out (as of March 2014)

 

 

 

 

 

 

 

 

 

 

View 3 minute GEM Video on Age Pension

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. We strongly suggest that no person should act specifically on the basis of the information contained herein, but should obtain appropriate professional advice based upon their own personal circumstances including personal financial advice from a licensed financial adviser and legal advice. Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306

Wednesday, 12 February 2014 05:16

Interesting Reports

 

We have assembled an excellent set of research reports for the investor who wants to better understand financial markets and strategies.  Some of these reports have been written ourselves, while others have been produced here with the consent of the authors.

 

Simply click on the image of the report to read.

  

Report 1. Wisdom of Great Investors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Report 2. How Australia's Great Complacency will come back and haunt it

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Report 3 - Generating Sustainable Retirement Income

 

  

Report 4. 11 attributes of successful investors

11 attributes of successful investors

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Wednesday, 12 February 2014 05:15

Economic Updates

Information is Power when it comes to investing.  At GEM Capital we work very hard to ensure we have excellent sources of information so that we can deliver high quality and well thought through investment strategies for our clients.

Here is a collection of information from some of our sources.

 

Magellan Financial Group

Magellan Financial Group was established by Hamish Douglass and Chris Mackay in 2006.  Hamish and Chris have extensive experience in investment banking in Australia and overseas.  Prior to establishing Chris was the Chairman of UBS in Australia.  Magellan specialises in global investing.  Chris and Hamish have relationships with some of the wealthiest families in Australia as well as high level business and political relationships both in Australia and abroad. 

 

Click on the Magellan icon below to read the recent Investor Update (June 2017)

Magellan June Rept Image

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Magellan Financial Group Website – www.magellangroup.com.au/


 

 

Platinum Asset Management Update

Platinum Asset Management are arguably the most successful International Fund Manager operating from Australia.  The flagship fund, Platinum International Fund has outperformed the International share market over the past 10 years by a significant margin.

 

Click on the Platinum icon below to read the most recent Quarterly Review (June 2017)

 

 

 

Platinum Asset Management Website– www.platinum.com.au


 Westpac Economics

The team at Westpac Economics are very highly regarded, both in terms of their depth of coverage, but also by their conviction of their views.  Here is a recent publication from the Westpac Economics team that provides a summary of the Australian economy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The following links require Adobe Acrobat, which can be found here.

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. We strongly suggest that no person should act specifically on the basis of the information contained herein, but should obtain appropriate professional advice based upon their own personal circumstances including personal financial advice from a licensed financial adviser and legal advice. Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306

 
 
 
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