The Valor Blog.
Investment News and Views, Direct from Our Team.

Buying listed investment companies above NTA…

I thank all the irrational investors who have been buying our clients listed investment companies at 30% premiums to their NTA.

Can someone please explain to me why anyone would ever pay a 30% premium to NTA when you can buy the same unlisted fund at NTA?

I am a very happy yet confused seller of my clients over priced companies.

This is a very good sign of the irrationality in markets at present. Paying $1.30 for something you can buy next door for $1 which requires only a few pages of forms to fill out shows that “Mr Market” has been drinking his jungle juice of late and is irrationally excited.

Stock markets are getting closer to their higher market cap to GDP ratios than their lows. The expected returns from stocks at this point are in their mid to low single digits. We are not excited about stocks in general at this point in time. It will be difficult to make reasonable returns for the average investor whilst almost everything is slightly over valued at this point in time. Bonds, shares, and property are all closer to their highs than their lows and expected returns are less than exciting. Cash returns may be one of the best performing asset classes from here. Ex Australian cash returns (inAUD) is likely to be possibly the best returning asset class for the next few years.