We made it to Friday. Here's my wrap of the week.
We Will Remember Them
Today, as I'm sure you know, is Remembrance Day.
Remembrance is a sacred duty. It goes beyond the day-to-day. Yes, the ASX is open. So are businesses and workplaces.
But we still take a minute to pause and reflect. To remember those who served, suffered and died in our country's name, and those of our allies.
I've written more about it, here.
We will remember them.
Lest We Forget.
Well, that happened quickly
I was asked on radio yesterday what might happen when the US inflation numbers were released last night. I don't mind saying that I didn't have 'US shares to rise 5.5%' on my bingo card!
It is, of course, blatantly absurd that a moderate fall in inflation – from ulta-high levels to merely pretty-bloody-high – should see US shares gain the equivalent of half an average year's returns in a single day.
As in, madness. Ridiculous. Stupid.
But, well, here we are.
No-one's complaining about the gains, of course (well, other than short-sellers or those who were 'waiting for the coast to be clear' and were sitting on cash). But… it's silly.
Which doesn't mean lower inflation isn't good news. It truly is.
And it doesn't mean that shares weren't cheap before last night's rally – I think some of them were.
But it is a rolled-gold example of how much we should take from daily market moves – in either direction: none.
And little more from the actual index levels, too. Remember, markets tell you what they're thinking and feeling… and that's not the same as objective valuation.
A fight for energy supremacy
If every dog has its day, perhaps every sector gets its time in the sun.
From what has otherwise been a pretty unappealing and unrewarding recent history, the energy sector is certainly enjoying its time in the sun.
First, it was Mike Cannon-Brookes and North American asset manager Brookfield, who lobbed a bid for AGL Energy Limited (ASX: AGL). Rebuffed, Cannon-Brookes decided to press on as a (large) minority shareholder.
We now know that whatever Brookfield saw in AGL, it also saw in Origin Energy Ltd (ASX: ORG), with the latter now the subject of an $18.4b takeover bid, from a consortium being led by Brookfield.
Great news for Origin shareholders, no doubt. And probably vindication for the management team who were arguing that Origin was being undervalued by the market.
I will be fascinated to see what Brookfield sees in Origin, as this rolls on, and whether their hopes are fulfilled or dashed. One thing, though – private equity mobs aren't known for their interest in lowering prices for consumers… so we'll see what comes of this one, if it goes ahead.
Quick takes
Overblown: 'New normals' are almost always overdone. Even more so when they assume that some historical experiences are going to be permanently altered. Like, I don't know, commodity prices. It's very brave to assume gas prices won't fall. Or coal. Or, you know, billionaires paying too much for media assets… I'm not saying that buying Twitter is Elon Musk's 'Alan Bond' moment, but I'm not saying it's not…
Underappreciated: When we recorded this arvo's episode of the Motley Fool Money podcast, Andrew and I chatted about things happening 'slowly, then suddenly' (his phrase), and the fact that disruption is stupidly hard, but when you reach 'escape velocity', the strength and size of the incumbents goes from an almost-unassailable advantage to an enormous millstone (my analogy). Whether you're investing in disruptors, or incumbents, be very wary of these inflection points.
Fascinating: Vanguard's new Superannuation product has been announced. The fees look cheap, without being dirt-cheap (yet), and there's some good innovation in the way the products will be both managed and offered. It's early days, but Vanguard is one of the good guys, and I'm glad they'll be adding to the competition in this really important sector. (And, for what it's worth, if you're someone who doesn't use an industry fund because you don't like their union links, this might be well worth looking into as an alternative to – usually higher-fee – retail funds.)
Where I've been looking: This is a harder question to answer after today's market jump! No, not really – even after those jumps, many, many companies are still far below their 52-week highs. I'm not one for 'screening', but I've been having a look at profitable companies that are growing revenue, and that the market has left behind. It's not the only place to look – and not every company meeting these criteria will be successful – but there are a lot to choose from, and I think the odds should be good, at prevailing share prices.
Quote: "It's insane to risk what you have for something you don't need" – Warren Buffett, on leverage.
Fool on!
