Peter Rodgers


February 7, 2018

Should we be worried about the recent falls in stock markets?

No, but read on to find out why: It looks like the market will finally get something that happens, on average, about once a year: a 10+% percent drop—the definition of a market correction.  They aren’t.  Corrections are unnerving, but they’re a healthy part of the economy—for a couple of reasons. Reason #1: Because corrections happen so frequently and are so unnerving to the average investor, they “force” the stock market to be more generous than alternative investments.  People buy stocks at earnings multiples which are designed to generate average future returns considerably higher than, say, cash or bonds—and investors […]
February 7, 2018

Beyond share prices

Investors shouldn’t overlook that there are two components to sharemarket returns – dividend yield and capital gains (or losses). Few investors would have missed the news reports of late pointing out that although Australia’s sharemarket has broken through the 6000-point mark, it’s still below the record pre-GFC high. But looking at share price movements alone can give investors a misleading impression and encourage them to overreact to short-term market shifts and other market “noise”. And by excessively focussing on asset price movements, investors may overlook the rewards from compounding total returns (as returns are earned on past returns) and from […]
November 22, 2017

The critical difference between desired and required returns

We probably all remember during those long difficult car trips as children repeatedly saying such irritating things to our parents as: “When do we get there?”. Perhaps adding to reinforce the point, “I knew we would never get there”. And then pleading whenever a fast-food joint appears on the horizon: “I NEED an ice cream”. Fast forward to today and think how we broadly face similar fundamental, yet much more complex, issues regarding our retirement savings. Astute investors set their long-term goals – the parallel being the destination of those seemingly-endless childhood road trips – and then work out how to get […]