Finding durable competitive advantage in a business | arcinvest | Brisbane Financial Investor

Finding durable competitive advantage

Durable competitive advantage is something I like to see in stocks. Also referred to as a moat among investors, durable competitive advantage refers to a business’ ability to maintain its competitiveness over the competition and successfully protect its long-term profits and market share.

The reason this advantage is often called a moat is because it protects the business from external forces, much like a moat protects a medieval castle and those inside it from outside invaders. The wider the moat, the larger and more sustainable the competitive advantage of the firm.Continue reading

Should I buy Cryptocurrency?

On January 3, 2009, the first bitcoins were created.

Ten years on the terms ‘bitcoin’ and ‘cryptocurrency’ are widely known. ‘How to buy bitcoin’ was the third most searched for ‘How to…’ phrase in Google in 2018. Indeed, there have certainly been miraculous stories of cryptocurrency catapulting individuals into millionaire status, however my perspective on this is that these are few and far between.

Crypto investments rarely end well.Continue reading

Making the most of record-low interest rates

On 1 July, the RBA announced a record low cash rate of 1%, which brings mortgage rates to their lowest level in over half a century. The low rate also means your deposits in the bank will be earning less interest. Trying to secure a new term deposit over 2% is almost impossible.

Currently, the investment markets are predicting an 80% chance that the 1% rate will be cut to 0.75% at the next RBA meeting in October.

So, what do low interest rates mean for you and your financial goals?Continue reading

ethical investing

Ethical Investing

We are used to thinking about the value of investment as measured by financial return. However, investing with an eye to environmental or social issues and ethical considerations has become more prominent.

Ethical investing has emerged as a response to investors’ will to combine ethical with financial considerations in investment decisions. It gives the individual the power to allocate capital toward companies whose practices and values align with their personal beliefs.

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Home Loans 101: Part 2

For many Australians, purchasing a home is one of the biggest – and scariest – financial decisions they will make.

Previously I discussed considerations regarding how much to save and home loan approval criteria. In part 2 I look at how to select the best home loan that suits your personal circumstances.

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Home Loans 101: Part 1

For most Australians, choosing to purchase a home is one of the biggest financial decisions they will make. Home loans are an essential force in the real estate market, with few individuals able to afford a home without a mortgage.

Are you thinking about taking out a new home loan but have no idea where to start? Let’s go through some of the basics you should know before signing on the dotted line.

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Risk in Investing

What is the most I can lose on this investment? This is a question that almost every investor who has invested or is considering investing asks or should ask at some point in time.

When you invest, you’re exposed to different types of risk. Given how fundamental risk is to investments, many new investors assume that it is a well-defined and quantifiable idea. Unfortunately, it is not – there is no single measurement or scale on which you can measure risk.

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The Value of Checklists

“Avoidable failures continue to plague us in health care, government, the law, the financial industry – in almost every realm of organised activity. It is the simple checklist that can bring about striking improvements in a variety of fields.”

This quote is taken from The Checklist Manifesto by Atul Gawande, a book that argues we can do better by using the simple method of checklists.

In the increasing complexity of life, it has become increasingly important to use checklists – building a skyscraper, performing surgery, servicing a car, flying a plane, all these things have lower error rates when utilising a well-constructed checklist.

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Capital Allocation

One of the most important responsibilities of a company’s management team is capital allocation. The hallmark of an exceptional CEO are the returns generated for the shareholders of that company over the long term.

The book The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William N. Thorndike details the wisdom of what makes a successful company, closely evaluating the performance of 8 outstanding companies and their leaders.

The 8 CEOs operated in different industries and markets and the returns made for shareholders over the long term were extraordinary. A common theme emerged – a strong focus on Capital Allocation.

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Long Term Returns from the Australian Equity Market

A recent publication of Australia’s investment risk and return data over the past 119 years showed 96 positive years compared with only 23 negative years. This roughly equates to 1 out of 5, with no more than two negative years in a row.

Sounds pretty good when considering a long -term investment strategy.

When I talk about the ‘long-term’, I am talking 7 plus years. However, I often have older clients who question whether they will be around in the long term to see their investment pay off.

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