Monday, August 10, 2015 8:43:52 AM
Australia is a bit of a commodity play. In the UK Vanguard provide VDPX which is very approximately around 50% Australia, 25% in each of Hong Kong and Korea i.e. also has 'access' to China (trade/markets)
Comparing Asia/commodity like with US and UK holdings Australia has seen both relative decline in currency and in the last year or less seen divergence in stock valuations
MIDD is UK mid caps
BRK is Berkshire Hathaway (US proxy)
AORD is Australia
KS11 is Korea
HSI is Hong Kong
The charts are all from a UK investor perspective i.e. in GB Pounds.
i.e. a Australian investor in UK (US) stocks would have gained both from better stock performance and FX (currency). Commodities in general have lagged.
Like the US$ the GB Pound is relatively strong and stocks doing relatively well compared to many other countries. Global fear would seem to be relatively high and the safety of more secure economies being sought (US$/GB£ over that of Yuan, Won, Aus$, Euro etc.).
Whilst there's relative 'Value' in Australia/commodities, the question is when might the decline reverse and seeing some of that Value being outed (gains).
Same as ever, what's relatively strong can continue to get stronger - but then at some point might see a sharp reversal of those gains; What's weak can become weaker, but then make a sudden rebound to out some/all of the Value.
With Iran opening up and providing even more oil, China in the doldrums, Europe still struggling ...etc, Commodity Value might deepen further still and/or take a while longer yet before any reasonable rebound/recovery is being seen.
AIM or rebalancing between Australia, UK, US or whatever will tend to profit take out of the winners, add to the laggards, until FX, commodities, whatever reversals occur and AIM starts working the other way around. i.e. since 2013 UK stocks are up around 1.3 gain factor (+30) compared to Australia being down near -20% at a 0.8 gain factor - which amounts to a 60% spread (1.3 / 0.8). Reducing UK to add to Australia in effect has the UK stock purchase power of Australia stocks having a 40% discount price tag (0.8 / 1.3) on Australian stocks.
As a alternative to the vWave, if you run a backtest of AIM on the target purchase and use that as a vWave type measure/metric generally that compares to a vWave measure, but specifically for the intended target.
Clive.
Comparing Asia/commodity like with US and UK holdings Australia has seen both relative decline in currency and in the last year or less seen divergence in stock valuations
MIDD is UK mid caps
BRK is Berkshire Hathaway (US proxy)
AORD is Australia
KS11 is Korea
HSI is Hong Kong
The charts are all from a UK investor perspective i.e. in GB Pounds.
i.e. a Australian investor in UK (US) stocks would have gained both from better stock performance and FX (currency). Commodities in general have lagged.
Like the US$ the GB Pound is relatively strong and stocks doing relatively well compared to many other countries. Global fear would seem to be relatively high and the safety of more secure economies being sought (US$/GB£ over that of Yuan, Won, Aus$, Euro etc.).
Whilst there's relative 'Value' in Australia/commodities, the question is when might the decline reverse and seeing some of that Value being outed (gains).
Same as ever, what's relatively strong can continue to get stronger - but then at some point might see a sharp reversal of those gains; What's weak can become weaker, but then make a sudden rebound to out some/all of the Value.
With Iran opening up and providing even more oil, China in the doldrums, Europe still struggling ...etc, Commodity Value might deepen further still and/or take a while longer yet before any reasonable rebound/recovery is being seen.
AIM or rebalancing between Australia, UK, US or whatever will tend to profit take out of the winners, add to the laggards, until FX, commodities, whatever reversals occur and AIM starts working the other way around. i.e. since 2013 UK stocks are up around 1.3 gain factor (+30) compared to Australia being down near -20% at a 0.8 gain factor - which amounts to a 60% spread (1.3 / 0.8). Reducing UK to add to Australia in effect has the UK stock purchase power of Australia stocks having a 40% discount price tag (0.8 / 1.3) on Australian stocks.
As a alternative to the vWave, if you run a backtest of AIM on the target purchase and use that as a vWave type measure/metric generally that compares to a vWave measure, but specifically for the intended target.
Clive.
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