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As the CFO of one of the world’s leading specialist natural resources investors, and after having employed Luke in a previous role, I’ve been thrilled with the efficiency, capability and service-offering Seneca have been able to offer my SMSF. Relative to the conflicted banks and standard ‘stockbrokers’ they provide me with unique investment opportunities, considered financial advice and most importantly, really tailor their advice to my circumstances and investment preferences. I think their innovative approach is set to really corner the market.
Rob Bishop - CFO, AMCI Investments Pty Ltd
Luke and the team at Seneca have been instrumental in driving returns for our SMSF in recent years. As the CEO of one of Australia’s most innovative organic fertiliser company’s, whilst I’ve been busy operating our business, Seneca has been able to provide us with a diversified set of direct and indirect investment opportunities, provide timely and strategic advice and educate us on our behavioural biases, resulting in excellent compounding returns. We’ve been strong supporters of Seneca since day 1 and enjoy the high-touch, often daily interactions we have with the team and appreciate the respect they show us and our money. We look forward to a long associate with Luke, John, Victoria and the rest of the team.
Anton Barton - Executive Chairman, BioAg
As retirees, the staff at Seneca have done a wonderful job managing our super fund and our additional family financial assets. Their attention to detail, willingness to go the extra mile and friendship is something we value immensely.
Stan W. - Family Office, VIC
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Cameron Low - Managing Director, Cadmon Advisory
Saturday 06 Aug 2022
The ASX 200 put on another 1% this week, with Industrials again outperforming Resources, which would have lagged more but for another strong week of the performance from the gold miners.
I feel a bit like a broken record at the moment, but our current investment thesis of “what worked last year, won’t work this year” continues to play out and it’s paying off for our clients. Our Seneca Australian Shares SMA is now +11.58% since 1 July (before fees).
Spurred on by a couple of recent client/prospective client conversations, I thought today I’d do a bit of an ‘investing for dividends 101’.
A dividend is a share of a company’s profits from a certain period of time (usually a half-year). It’s not necessarily ‘dividends’ that occupy much investor attention, its ‘dividend yield’.
Saturday 30 Jul 2022
Another strong week on the markets this week, the ASX 200 added 2.3% with gold stocks outperforming.
This wasn’t unsurprising, as gold prices increased 2.3% this week in USD terms, but in AUD terms, it was more like 3.12% with the USD declining against the AUD (and most other pairs) on the back of Jerome Powell’s comments this week.
The macro environment is playing out as I’ve forecasted (for once! and for now…) Future interest rate and inflation expectations have gotten ahead of the reality we are now starting to see more clearly. In short, I think the below 15% sell-off in bonds is overdone (or if you want to put in another way, I think bond yields can come down.)
Saturday 23 Jul 2022
The ASX 200 had the best week since March, adding 2.81%. Small and mid-cap stocks the real outperformed while the top 50 lagged.
Back on 8 July, we pointed to an apparent coincident, turning point in bond yields and the outperformance of metals & mining stocks relative to industrials circled in red below. It appears, on reflection, that point in time was critical.
Industrials have significantly outperformed since (green line declining) and that ratio is mean-reverting to its 10-year average (red horizontal line).
The yield curve foreshadows a recession in the US, with the 10-3 year curve currently inverted and previous inversions preceding a recession (grey shaded).
Sunday 17 Jul 2022
The ASX 200 closed the week down 1.1%, with resources getting smoked (down 5.5%) and industrial stocks actually up 0.4%.
This is just a continuation of our recent “what worked last year, won’t keep working this year” investment thesis. My basic concept is that bond yields revert to their trend (moving up, but not this fast).
Below I show the US ISM Manufacturing & Non-Manufacturing Survey data lagged 6 months (i.e. 6-month forward predictor) vs the US 10y Treasury bond yield.
The red line is the trend in bond yields. The blue line is the US 10yr Treasury Bond. The green and maroon lines are the lagged survey data and the blue arrow is my annotation.
In short, survey data capped out 6 months ago, bond yields now declining and that means industrials outperform resources and defensive outperform cyclical – which is the opposite of the last 6-12 months.
Friday 08 Jul 2022
The ASX 200 closed up 0.45% on Friday and has rallied 2.20% since this time last week. If you don’t own mining stocks, your portfolio is probably up more like 3%, as they underperformed significantly (despite a strong day on Friday, XMM +1.28%).
This lines up with the thesis that we outlined last week (In short: economic outlook has changed, what has worked, won’t keep working.)
Data only deteriorated further this week, nonfarm payrolls out tonight in the US should confirm what the markets already know, the global economy is slowing.
The ratio of ASX300 Metals & Mining Index and ASX300 Industrials Index vs US 10 Year Treasury Yield (Inverted) Over the past 12 months