The Rules of Investing

The prophets of doom are blowing their recession horns. Accordingly, investors want to hold assets that can be bulwarks against whatever's driving recession - that being inflation in today's case. And that's what today's edition of The Rules of Investing is all about. Livewire's James Marlay sat down with Warryn Robertson, who is a portfolio manager and analyst at Lazard Asset Management. Warryn's responsible for managing the Global Equity Franchise Strategy as well as Lazard's well-known Global Listed Infrastructure Fund - which has roughly $20 billion under the hood.  Today's episode will focus on infrastructure - a topic we know is front of mind for our readers. In our recent survey infrastructure ranked third as the asset class they're most likely to increasing exposure to over the next 12 months.  Warren founded the infrastructure strategy back in 2005 and it has returned 10.7% per annum since then.  You'll hear why infrastructure is "the best inflation protection you can get".  But don't go running off to market before pressing play on this episode - as it can't be just any old infrastructure.  He also explains how Lazard value their assets, the key thing the whole investment industry missed during COVID, the increasing trend towards privatisation of infrastructure and a near monopoly asset that he believes offers compelling value.  This episode was recorded on June 23, 2022. 

Let's face it, it has been hard going in the small caps space - which is down almost 18% this calendar year.  As soon as you get headwinds such as inflation and rate hikes, babies will invariably get thrown out with the bathwater. Good companies with strong balance sheets get sold off in the stampede as investors run for the door. Today's guest on The Rules of Investing is Oscar Oberg, a lead portfolio manager at Wilson Asset Management. Oscar and his team run the firms flagship listed investment company WAM Capital (ASX: WAM), which has a market cap over $2 billion, as well as WAM Microcap (ASX:WMI), WAM Research (ASX:WAX) and WAM Active (ASX:WAA). Oscar is firmly of the view that small cap sentiment has become overly pessimistic, and the longer term view is better than the prevailing headlines suggest.  "On a medium to long term view, I'm positive. We want to be ready for when it changes, and it will flick really quickly." Oscar recently joined Livewire's David Thornton on the Rules of Investing podcast where he outlined his playbook for investing through the bear market currently gripping small cap industrial stocks. Oscar says he is seeing craziness in the market and it is creating great opportunities that are categorised under three broad baskets. beaten down stocks where values are massively depressed; companies with strong asset backing; and retailers where sentiment has massively overshot to the downside.   As you'll hear, those baskets are full to the brim and Oscar shares a number of stocks that he believes look compelling right now. Timestamps 0:52 - How Oscar and the team run the portfolio and uncover new ideas 4:25 - The outlook for small and mid-cap Australian shares 6:56 - Why earnings downgrades are on the way for small caps 8:18 - Stocks that have taken a beating and now look interesting 10:50 - Some of the sectors Oscar is avoiding and a few that look interesting 14:48 - Inside WAM’s research and active investment processes 19:58 - Never a put a redline through a potential opportunity 22:20 - The one-way market in ASX listed stocks 23:55 - Opportunities in unloved microcaps 29:00 - What it will take for sentiment to turn for small caps 32:15 - The 3 favourite questions 

Imagine for a moment that you had a clean sheet of paper from which to build your investment portfolio from the ground up. Would that rebuilt portfolio look the same as what you own today? One could guess that for many people the answer is no, and that if given the chance to start from scratch their portfolios would look quite different.  Livewire's James Marlay puts this question to Simon Mawhinney, the Managing Director and Chief Investment Officer of Allan Gray, a contrarian investor responsible for oversight of the firm's Australian equity strategies. They also touch on what it means to be a contrarian investor and where contrarian opportunities exist right now.

We're all well aware of the headwinds battering markets today - inflation, supply chain pressures, and rate hikes. Yet it's easy, and misguided, to broad brush the market and expect all stocks to respond in the same way. As you'll learn in this edition of The Rules of Investing, what is a headwind for one stock can be relative value for another.  Today’s guest is Simon Shields. Simon co-founded Monash Investors in 2012 following stints as head of equities at UBS and Colonial First State.  Monash Investors are a long/short Australian equity manager with an absolute return focus, which it adopts in its two funds – one listed and one unlisted. Today won’t focus on Simon’s investment style – for that, I urge you to listen to the episode published back on Oct 09, 2020.  Simon discusses: The outlook for oil prices, and what this means for Aussie producers Back to the future for supply chains What earnings downgrades will mean for stock pricing  Timestamps: 1:30 - What gave birth to today's headwinds 3:30 - Oil supply in trouble, and the stocks that will benefit 9:00 - Inventories and cost pressures 17:00 - Cost pressures on consumer discretionary 20:30 - Growth discount rates 24:00 - Companies with moats 26:00 - Time for shorts 30:00 - The problem with benchmarks 37:00 - 3 favourite questions

Global markets are in a world of hurt. This week the Dow Jones Industrial Average nose-dived 1,100 points - its biggest loss since 2020. For all but those with the greatest of risk appetites, it's time to hunker down and weather the volatility storm.  But the rout won't last forever. As the saying goes, the night is darkest just before the dawn. So being ready for the turn will be key to capturing the growth to come.    For today's episode of Rules of Investing, we're joined by small cap notary Ben Griffiths, Managing Director and Senior Portfolio Manager at Eley Griffiths Group. Ben is a notary of sorts in the Australian small cap space, having co-founded Eley Griffiths Group back in 2002 with Brian Eley following a successful career as joint head of small companies at both BT Financial Group and ING Investment Management. Ben discusses the mess markets are in today, and the three signs he's waiting for to know when it's time to start buying. We also take a deep dive into small cap resources - a sector that can't, and shouldn't, be ignored when investing in small caps. 

The RBA lifted the cash rate yesterday by 25 basis points, to 0.35%. And just like that, its war on inflation - which it will wage against aggregate demand - is underway.  The threat of inflation has been written on the wall for some time, though, prompting some to wonder if the central bank has dropped the ball. Today's guest, Charlie Jamieson, co-founder of Jamieson Coote Bonds, questions whether the RBA ever had the ball in the first place, having stated as early as last year that it didn't expect to lift rates for three years. "It was absurd to think we'd be in 0.10% settings until 2024," says Jamieson.  The hikes will now come thick and fast, if bond market prognostications are anything to go by.  "The bond market is pricing the RBA to hike rates higher than the US Federal Reserve... that's extraordinary." In today's episode, Charlie rates the RBA’s handling of the inflation (and he doesn’t mince his words), how bonds will perform in light of it, and pulls back the curtain on bond portfolio construction - namely, which bonds to include and when.  1:26 - Did you expect inflation to be that high? 5:05 - Has the RBA dropped the ball? 12:35 - How culpable are central banks for inflation? 20:40 - The yield curve inversion - trajectory for rates? 28:30 - How possible is it for credit markets to freeze up? 31:50 - Bond return expectations 37:15 - How do you balance the duration as rates and expectation change? 41:45 - Active vs passive bond funds? 45:00 - Absolute return vs index bond funds 48:00 - How bad will it get? 50:55 - 3 questions

Conventional wisdom holds that 'traditional' natural resource investments are a sure, safe bet. And justifiably so: Land, from which natural resources have been extracted, is one of the classic four factors of production.  They offer diversification and inflation protection courtesy of increased pricing power when costs go up.  It doesn't take much to realise the relevance of these attributes in the current environment.  But here's the thing. Renewables offer all those benefits and more, according to today's podcast guest Lucas White - portfolio manager for GMO's Resources and Climate Change strategies. "The broad economy could be struggling, or GDP growth could be flattish or barely growing, but if the world is rapidly transitioning to clean energy, there's no reason why a clean energy strategy couldn't do very well."  In this episode of The Rules of Investing podcast, you'll also hear why renewable energy will be taking the commodities sector along for the ride, and how GMO filter their clean energy stocks to capture outsized returns. 

After 4 and a half years at the helm, Patrick Poke is parting ways with The Rules of Investing. Please enjoy some highlights from the most popular episodes of the podcast to date. We also introduce the new host of the show.