subscribe to our newsletter sign up
Beware 'disruptive' investments

Beware 'disruptive' investments

love-at-first-sight investment opportunities

 A wealth management firm has cautioned investors against falling for new market entrants like Amazon, arguing that investors are overestimating their impact on the Australian equities market. 

Further, investors could be overlooking incumbents in the process, Bennelong Australian Equity Partners have said.

Speaking in Sydney on Wednesday, Bennelong Australian Equity Partners investment director Julian Beaumont said people were prone to becoming “really excited about innovation and disruption” when selecting stocks.

However, the time it took for this disruption to have a “genuine impact” was often not factored in, nor was “the profitability of the innovator or disruptor”.

“I think that people tend to overestimate the speed with which some of the innovation can work,” Mr Beaumont said.

“I think the old tagline is that people overestimate the impact in two years and underestimate over 10 years, and I suspect that that's probably what's happening.”

Mr Beaumont also pointed to the lukewarm reception of Amazon’s Australian launch when it opened its doors in Melbourne in November last year.

“The yawn on Amazon's entry was deafening compared to what we saw in the run-up to that,” he said.

In spite of Amazon’s launch, companies such as Channel 9, Metcash and JB Hi-Fi represented “some of the strongest performers, particularly over the last year” in Australian equities.

“Not withstanding Amazon's entry, JB Hi-Fi has hit highs more recently with really good results, good business,” Mr Beaumont said.

“Something's been tested, and yet Amazon hasn't done anything to it.

“So Amazon isn't going to be a big killer, at least in the near term as people think.”

Beware 'disruptive' investments
nestegg logo
Promoted Content
Recommended by Spike Native Network
Anonymous - A decline in cryptocurrency would even be beneficial for as money flows from one market to another.....
The Property Treasur... - Large amounts of this debt can never be repaid. Sell now or miss out forever.....
Dr Terry Dwyer, Dwye... - You don't need to go to Harvard and do a PhD in economics as I did to know that investors will likely cut and run in a rush to the exit. Pity the RBA.......
David Williams - So basically, the Reserve Bank is saying that the investment property market is an accident waiting to happen. Bring it on! First homebuyers have.......