Thursday, January 28, 2016
In financial and investment planning news, Financial markets have started the year on a rough note as last year’s worries about China and global growth in the face of US monetary tightening continue. This could drive more short term weakness. However, in the absence of US/global recession, which still seems unlikely, it’s hard to see a GFC style bear market. The key for investors is to recognise that shares offer a higher return potential after sharp falls, selling after big declines just locks in a loss and that dividend income from a well diversified portfolio is little affected by share market volatility.
Tuesday, December 15, 2015
In retirement financial planning news, 2015 has been a messy year for investors as worries about China, emerging countries and the Fed caused volatility and uneven returns across asset classes. Australian shares continued to under-perform. 2016 is likely to see continued okay but uneven global growth, low inflation & easy monetary conditions. While the US is likely to raise rates gradually, other countries including Australia remain biased to further easing. Most growth assets, including shares are likely to trend higher, resulting in reasonable returns. But volatility is likely to remain high as the easy gains are well and truly behind us. The main things to keep an eye on are the Fed, China and the ongoing rebalancing of the Australian economy.
Thursday, October 22, 2015
Investing during times of market stress and volatility can be difficult. For this reason it’s useful for investors to keep a key set of things – call them rules – in mind. The key rules, in my view, are: make the most of the power of compound interest; be aware that there is always a cycle; invest for the long term; diversify; turn down the noise; buy low and sell high; beware of the crowd at extremes; focus on investments offering a sustainable cash flow; and seek advice.
Tuesday, August 25, 2015
August has been a very tough month for Australian and global investors. At the time of writing the Australian sharemarket is down over 10% for the month. It is extremely difficult to forecast where the market will go on a day to day basis as it is influenced by many factors - but what we do know is that panicked selling by others often creates opportunities for stock pickers like us who have a longer term focus.
Wednesday, July 22, 2015
The past financial year saw a third year in a row of solid returns for diversified investors. While returns are likely to slow over the year ahead, they should still be reasonable as share valuations are okay, the global economy is continuing to grow and the uneven and constrained nature of that growth is keeping inflation low and monetary conditions easy.
Tuesday, July 07, 2015
Key points: The Greek No vote means more uncertainty ahead regarding Greece, with significantly heightened risk of a Greek exit from the Euro. The threat of a flow on to other Eurozone countries is likely to keep markets on edge in the short term. However, contagion is likely to be limited as the rest of Europe is now in far stronger shape than was the case in the 2010-12 Eurozone crisis and defence mechanisms against contagion are now stronger. As a result we don’t see the Greek debacle derailing the European or global economic recoveries. So while the correction in shares looks like it might go further, the broad rising trend in markets is likely to continue.
Wednesday, June 17, 2015
The desire for instant gratification is being heightened by modern technology providing immediate access to daily planetary happenings. However, turning down the noise surrounding investment markets is essential for successful investing which relies on a balancing act of the longer term.
Wednesday, April 29, 2015
While corrections are inevitable, we still appear to be a long way from the peak in the investment cycle. Shares are not unambiguously overvalued and on some measures are still cheap, uneven and below trend global and Australian growth is extending the economic recovery cycle, monetary conditions look set to remain easy and investors are far from euphoric.
Tuesday, April 21, 2015
Key points: A housing recovery has been a necessary aspect of rebalancing the economy through the mining bust. While Australian property prices are overvalued, this should not be a constraint on the RBA. Expect another rate cut in May with the possibility of more to follow. The medium term return outlook for residential property is likely to be constrained.
Wednesday, February 11, 2015
The RBA was right to cut interest rates again. Growth is too low and inflation is benign. Expect the cash rate to fall to 2% in the months ahead. Record low borrowing rates, the lower $A and the boost to spending power from lower fuel prices should help boost growth to 3% or just over into next year. For investors: bank term deposits offer poor returns; remain wary of the $A; favour Australian over global bonds; and shares, commercial property & infrastructure continue to offer attractive yields.
Wednesday, January 28, 2015
While Syriza has won the Greek election, a Grexit is not the most likely outcome. Even if Greece were to exit the Euro, peripheral Europe is now in far better shape than in 2010-12 and Eurozone defence mechanisms are stronger. While the Euro likely has more downside, Eurozone shares are attractive reflecting relatively cheap valuations, the likelihood of stronger growth ahead and very easy ECB monetary conditions.
Thursday, December 11, 2014
Key points 2014 has been a positive but somewhat constrained and messy year for investors as the global economy remained in a cyclical “sweet spot” despite various threats, but Australian shares underperformed. 2015 is likely to see okay but uneven global growth, low inflation and easy monetary conditions. While the US is likely to start gradually raising rates, other countries including Australia are likely to ease monetary policy. Against this backdrop the bull market in shares and most growth assets is likely to continue. However, with shares dependent on rising earnings, volatility is likely to be a bit higher and returns okay but constrained. The main things to keep an eye on are: when/if the Fed starts to raise rates, Europe, the Chinese property slump, and growth outside of mining in Australia.
Thursday, December 11, 2014
This year has seen an endless list of worries. Ukraine, a property collapse in China, the end of quantitative easing and talk of rate hikes in the US, global deflation, renewed weakness in Europe, the troubles in Iraq, protests in Hong Kong, Ebola, Australian Budget cutbacks, the collapse of the iron ore price, etc.
Thursday, October 16, 2014
People who receive the Age Pension from Social Security need to be aware of an important change occurring form 1st January 2015. This is to do with the way income streams from Allocated Pensions or Account Based Pensions are assessed under the income test when started after this date.
Wednesday, September 24, 2014
With quantitative easing set to end next month, the Fed is on track to start raising interest rates next year, most likely in the June quarter. The anticipation and then reality of this could cause some volatility in shares. However, once it gets underway Fed tightening is likely to be gradual and history tells us that it’s only when rates reach onerous levels that they become a real threat to share markets and ultimately economic growth. Progress towards eventual rate hikes in the US will put further downwards pressure on the $A, which we see falling to around $US0.80.
Wednesday, September 17, 2014
We remain in a time of historically low interest rates around the globe but this scenario can’t remain for ever. At a recent conference in Sydney we were shown a term deposit rate chart for the “Platinum Clients” of the Bank of America and these investors were being offered between 0.1%-0.2% to invest. It is no wonder that the US sharemarket has reached record levels when these term deposit rates are the alternative.
Tuesday, June 10, 2014
During the past few years Australia has had a tough time in achieving economic reform. The first attempt in a decade at serious tax reform got bogged down with debate around the poorly designed Resource Super Profit Tax in 2010 leading to the less than optimal mining tax, the attempt to put a price on carbon pollution looks like it will soon be terminated and getting the budget back under control is proving very difficult.
Tuesday, March 11, 2014
Doug Isles a regular presenter at our Maher Digby client information sessions, discusses overseas markets in a recent Sky News Business program.
Tuesday, February 25, 2014
The US economy is yet again reinventing itself. This has been helped along by a determination to get the US economy moving again after the global financial crisis but the real drivers are an energy boom, a manufacturing renaissance and American innovation.
Wednesday, August 28, 2013
With the much anticipated Australian Federal election now set for 7 September it is natural to wonder what impact, if any, there might be on investment markets – both in terms of the uncertainty created by the election itself and in terms of the outcome.