The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, June 7, 2010

Broken record: why Aussie equities offer no diversification

I have made this same point too many times to count--Australian shares offer basically zero risk diversification vis-a-vis international equities. Why almost all super funds split their listed equities weights 50:50 between global and Aussie shares defies comprehension. CommSec's Craig James reiterates this point again for us today (see quote and chart):

"Whether we like it or not, the Australian sharemarket is hostage to the movements in sharemarkets in Europe and the US. Australia accounts for less than 3 per cent of world sharemarket capitalisation, so when the order comes from London and New York to sell, our shares are reduced in value in line with the major markets of the world."