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Investment management can be a brutal business. When you're talking small caps, the brutality is amplified orders of magnitude.  Between March 20 and September 3 last year, the ASX Small Ordinaries Index sky-rocketed 44.38%. That's the kind of performance that will make a fund manager euphoric, but also nervous. Mean reversion is a thing.  Eventually, you need to pay the piper for that kind of performance. And pay the piper the small cap sector most certainly did, in the form of a 25% downward correction.   But just as what goes up must come down, what goes down will eventually go up. And we may have passed that inflection point, with the Small Ords Index up over 11% in the last month.  In this episode of The Rules of Investing, Livewire's David Thornton sat down with Donny Buchanan, Co-Founder, CIO and Portfolio Manager for the Lakehouse Small Companies Fund.  Donny's fund has been swept up in the sell-off. But frankly, so has just about every fund. What's important is how they set themselves up for the recovery. You make money in the buying, after all.   Donny discusses the problems associated with valuing tech growth, the importance of believing in and sticking to your fund's mandate, and the lessons he's taken away from this latest sell-off.  He also offers up a small cap tech stock that is quietly forming a monopoly by creating its own ecosystem. 

Fixed income has had a torrid time of it the last year – in fact, by some measures it’s been the worst year on record – with US treasuries losing about a tenth of their value.  Since the beginning of this year, global bonds have recorded their worst performance on record, with the Bloomberg Global Aggregate Total Return (USD) Index down around 10% year to date - equating to $3.76 trillion in lost value.  This performance has also coincided with a sell-off in global equities, with the MSCI World Net Local Total Return Index down around 21% over the same period.The last time that we saw a multi-month sell-off in both global equity and bond markets was in 1994 – a time when the Federal Reserve also had to sharply reverse policy. But if you’re thinking about selling out of fixed income – think again. Crystallising a loss by panic selling may be the worst thing you can do. Joining us for today's episode of The Rules of Investing is Andrew Canobi, director of Australia Fixed Income at Franklin Templeton. He’s been in the role since 2014, and is responsible for steering macro strategy, credit research, and fixed income portfolio construction. Prior to that, Andrew was director and portfolio manager for Deutsche Asset & Wealth Management. He also had stints at Invesco and ABN AMRO. What goes up must come down, and as Andrew explains, yields can only go so high, so we mightn’t be very far from a golden era in fixed income.  He also gives us his take on the inflation cycle, why we should take our cues from the market rather than central bankers, and where the best value exists in fixed income.  This episode was recorded on June 18, 2022.  Timestamps 1:20 - Are markets at DEFCON 1? 2:25 - Will central banks do too much or too little? 3:30 - Should we take cues from central banks or the market? 8:00 - How is supply side inflation tamed by killing demand? 10:00 - Is Australia's housing market the joker in the pack? 14:00 Why fixed income is still a good investment 20:45 - A corner of the fixed income market investors don't know about 22:20 - Investing in overseas bonds 26:00 - 3 favourite questions

Markets are a right mess today, thanks to surging inflation and the fear of what that will do to earnings.   In this environment, you want companies that have the market position, leadership and balance sheets to survive. However, actually finding these companies is no mean feat.  On today's episode of The Rules of Investing, Livewire's David Thornton sits down with Vince Pezzullo - Deputy Head of Equities at Perpetual. Vince joined Perpetual in 2007 and has covered a heap of sectors since then; you name it - chemicals, financials, banking, telecommunications, materials and REITS. He now heads up the Australian Share fund, Geared Australian Share fund, Direct Equity Alpha fund and the Perpetual Equity Investment Company (ASX:PIC) with about $435 million under the hood. There's not much we don't cover in this episode. We take a granular look at the affect inflation is having on valuations and company decision-making, the structural shifts afoot in the energy market, and the qualities every company in your portfolio should have.  We even discuss an Irish gambling stock making waves in a wide-open US market.    This episode was recorded on June 23, 2022.  Timestamps 1:45 - Company margins 5:00 - Investing to get down the cost curve 6:00 - DuPont ROE 7:30 - Growth stock valuations 9:30 - Energy, the global tax on growth 10:45 - Shifting trade flows 13:10 - Santos 14:30 - Energy sector going from spot price to contracts 19:45 - Banks margins and rising rates 23:00 - Inflation: 1990s vs 1970s 25:30 - An investment checklist during high volatility 28:00 - The limit to duration risk 29:10 - The importance of real assets 32:00 - The Irish bookmaker making waves in the US 39:00 - 3 favourite questions

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. 

The multi-bagger is the “holy grail” for most small cap investors. Whether you like tech, resources, industrials, or all the above, there’s nothing quite like the satisfaction of watching your stock go up three, five, or even 10 times. Dean Fergie from Cyan Investment Management has had a few of these stocks in his nearly-25-year career in Aussie small caps. He has noted a few similarities among them – though he freely admits its “obvious stuff”. The company’s product or service must be scalable. People love what the company is selling. These types of companies tend to generate ‘buzz’ – think Afterpay in the early days, or for those that remember, Sanity stores when they were being rolled out in the 90s. People are forced to use it, regardless of whether they like it. He points to Transurban (it was a small cap once!) as a good example. In this episode of The Rules of Investing podcast, Dean explains how to handle it when markets aren’t going your way, we discuss a handful of Aussie small caps – some well-known, some not so – and he tells us why he thinks it’s time to start putting cash to work after the recent sell off. 

It's not easy being one of the world's most-famous short-sellers.  As Jim Chanos knows, it takes thick skin to deal with daily negative backlash, and, of course, markets storming "parabolically" higher over the past few years.  But now the tides are turning, and rather dramatically, according to the 64-year-old Wall Street veteran. In fact, since September 2021, investors have been slowly waking up to misleading accounting practices among the world's most highly valued firms, and their share prices have plunged accordingly.  And while Chanos is adamant his market predictions should be taken with a grain of salt, he notes that there continue to be several well-loved companies, Tesla included, that still could have a long way further to fall.  "We have a number of US$100 stocks that we think are probably worthless, because the business model is broken, and yet they are reporting numbers that are not real," he says.  So which companies could be misleading investors today? In this exclusive Livewire interview, you'll get an inside look at the legendary short seller's view on markets, as well as some of the global companies that Chanos considers to be posting fraudulent financial figures and could be in for a rude awakening over the months to come. 

Rising rates, rising volatility, and rising geopolitical tensions. It's tough being an equity investor in today's market.  But Australian investors have generally fared better than most. With a heavy skew towards resources and financials, both of which have outperformed the broader index in recent months, the ASX 300 has outperformed the S&P 500 by nearly 5%.  In the latest episode of The Rules of Investing podcast, I speak to John Lockton, Head of Investment Strategy at WILSONS. He shares his views on the banking, resources, and healthcare sectors following the recent reporting season, he tells us about one important macro issue the market is overlooking, and we hear about several Aussie stocks with significant upside.

According to Andrew Clifford, CEO and Co-Chief Investment Officer of Platinum Asset Management, there's one variable that matters more than any other in stock markets. That variable is interest rates. Interest rates can't get much lower than current levels, and, until recently, central banks have been pushing rate hike expectations years out into the future. But that narrative has changed abruptly, and market participants are scrambling to dial up the speed and quantum of rate hikes in their forecasts. In a note sent to Platinum's investors, Clifford said he sensed a 'regime change' was on the cards and that January could be a sneak preview for what lies ahead in 2022. The significance of this regime change has been well articulated. Low-interest rates have been a powerful tailwind for a long time, especially for the valuations of defensive and growth companies. Every bull market has two things in common, according to Clifford. Firstly, it has a great story, which is a true story. In the case of the current market, we've seen some unique companies emerge in the US tech sector. The second ingredient is easy monetary conditions. He says that bull markets die with higher interest rates, and then the underlying fundamentals of companies get questioned. James Marlay recently had the opportunity to sit down with Andrew Clifford to explore his views on the investment backdrop, why he is short US equities and long China and two high-conviction ideas in the Platinum International Fund's portfolio.

Guest: Tim Toohey, Head of Macro and Strategy at Yarra Capital Management. Just a few minutes ago, Russian President Vladimir Putin announced a "special military operation" in Ukraine - an apparent euphemism, for the world watching on, for "invasion". Despite weeks of speculation, the news of war in Europe is truly shocking no matter where you are on Earth. Most investors have never witnessed anything like this in their lifetimes, and how markets react in the short term is anyone’s guess. Just a couple of days ago, I had an in-depth discussion about what were then just ‘tensions’ in Ukraine with Tim Toohey, Head of Macro and Strategy at Yarra Capital Management. We discussed the likely effects on different parts of the market, as well as the best way to hedge portfolio risk. In this episode of The Rules of Investing podcast, we also hear why markets may be underestimating the rate rises set to come from the US Federal Reserve, and he explains a critical piece of data out of China that could have global ramifications.

Guest: Chris Bedingfield, Quay Global Investors. Australian housing is expensive. Hardly a shocking statement. But if you ask a bunch of investors and economists why it’s expensive, you’re bound to get a wide range of answers. Most of them will refer to credit availability in some way. A few might mention a lack of supply and demographics, and almost all of them will discuss interest rates. But according to Chris Bedingfield, Principal and Portfolio Manager at Quay Global Investors, there’s a simple and absolutely critical reason that almost everyone overlooks. Indeed, in more than a decade of closely following markets, I’ve never heard this view put forward. It all boils down to the replacement cost – or the cost of building a new home. Sure, there’s a premium for being closer to the city or the beach, and various other niceties that come with expensive inner suburb houses. But it’s the cost of building new property in Bankstown or Craigieburn that ultimately drives prices in the rest of the city in the long term. As The Rules of Investing podcast returns after a break, Chris explains why it’s so expensive to build new housing in Australia, shares some of the best opportunities in real estate today, and he tell us why he thinks many people are overestimating the impact of working from home. 

Guest: Owen Hegarty OAM, Executive Chairman, EMR Capital.  There have been few times in history that one could look at an industry or sector and confidently expect decades of growth ahead. But this is the situation that the resources industry, in particular, those exposed to decarbonisation, finds itself in today. Governments around the world have committed to emissions reductions targets that start from 2030, going all the way out to 2070. And there is a range of metals that will be required in great quantities if we're to have any chance of meeting those targets. Owen Hegarty OAM, Executive Chairman of EMR Capital and founder of the 'Mighty Ox' (Oxiana Resources), is acutely aware of this. From the obvious beneficiaries, through to the counter-intuitive, he's built a portfolio of companies that are set to ride this wave of growing demand. In this special episode of The Rules of Investing to celebrate 1,000,000 downloads, I speak to Owen about his experience building the Mighty Ox, why potash is critical for feeding a growing population, and he identifies one recently listed ASX copper miner that's set to benefit as the world goes green. 

Christmas is already upon us, which means it's time to take a break from your regular Rules of Investing programming. But don't worry, there's plenty of podcast content to keep you informed and entertained of the summer. Listen to this special short preview to learn what's coming up. 

Consistency is key to successful investing. Just ask someone who invests in speculative mineral explorers – they’ll likely be able to tell you about their big winners but might be less keen to discuss their strike rate. But even getting 60 or 70 percent of your picks right is enough to produce outstanding performance. That’s one of the reasons Ben Clark from TMS Capital has done well, both on Livewire and in the High Conviction Fund that he runs. Regular Livewire viewers will recongise Ben as a regular guest on Buy Hold Sell and our annual Outlook Series. Not only did he win Livewire’s ‘Don Bradman award’ for the most consistent stock picker on Buy Hold Sell, but he also topped out the Fundies’ Picks in our 2020 Outlook Series. So with just a couple of episodes of The Rules of Investing remaining for 2021, I thought it was about time we got Ben on the show to understand what makes him tick. In this episode, we learn about his approach to investing in quality growth stocks, he shares his views on the Afterpay/Square merger, plus we discuss several Aussie stocks that he thinks have outstanding opportunities for growth.