Latest News from Newealth

18 Aug 2022

Market Metrics: MSCI World EBIT

EBIT stands for earnings before interest and taxes and is an indicator of a company’s profitability.

By ignoring the tax burden and capital structure, EBIT helps to identify a company’s ability to generate enough earnings to be profitable, pay down debt and fund ongoing operations.

A higher EBIT is much better than a low EBIT.

Global companies operation at a high EBIT has been a contributing factor for why the fall in asset prices paused at correction levels in June and did not crash.

Companies globally are making money even with rising interest rates and inflation.

Click for chart.

If you have family, friends or colleagues that want financial advice please ask them to contact us and we will work out how best to help.

 

11 Aug 2022

Market Metrics: Private Company Valuations

We have seen many financial market crashes first hand during the past three decades with the three biggest being the 2000 Tech Wreck (Dot-com Bubble), the 2008 Global Financial Crisis (GFC) and the 2020 Coronavirus Crash.

The period from December 2021 to June 2022 has not been a financial market crash for listed companies in Australian or listed companies globally but the same cannot be said for private companies where Enterprise Valuations have dropped an average of 60%.

That figure is uncomfortabley large.

Click for chart.

The bigger issue however is the lack of liquidity available to investors because there is no public market to buy or sell holdings.

This is our number one concern with unlisted assets because in a crisis you want the flexibility to be able to action changes.

On a more positive note, financial asset prices have increased over the past month because the Mr Market is expecting inflation to slow.

If you have family, friends or colleagues that want financial advice please ask them to contact us and we will work out how best to help.

 

5 Aug 2022

Friday Tidbit

Does it pay to be the Chief Executive Officer (CEO) of a listed company in Australia?

Absolutely is the answer when the 50th richest boss on the list has a shareholding of $28m in addition to their executive salary and bonus incentives.

Click for table.

 

3 Aug 2022

Australian Interest Rates

The RBA (Reserve Bank of Australia) increased the Cash Rate to 1.85% and again the only good news will be for savers.

This is the fourth time in three decades that the RBA has rapidly increased the Cash Rate and every time asset prices have fallen.

Click for chart.

Yes it is likely that RBA will continue to increase Cash Rate with the expectation that residential mortgage interest rates will double from the current medium 3.0% to 6.0% per annum.

More than doubling in residential mortgage interest rates is very unlikely because the Federal Government cannot afford to financially bankrupt residential mortgage holders who account for around 30% of Australian households.

Now is the time to remain invested according to your appetite for volatility and continue to buy more quality assets at discounted prices.

If you have family, friends or colleagues that want financial advice please ask them to contact us and we will work out how best to help.

 

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