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Market Updates

Nine Rules for Investors

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.

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View on Market Volatility

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.

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End of Year Returns and Financial Outlook

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.

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Greece after the “No” vote

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.

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Global Trends for Investors

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.

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Investment Cycles

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.

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Australian Home Prices and Interest Rates

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.

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Australian Interest Rates on the Slide

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.

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Oil Prices create a Boost

Thursday, January 29, 2015

The past year has seen the world oil price fall by more than 50% and the oil price is continuing to slide. The main factor behind this collapse is the global supply of oil has surged relative to demand

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Greece and the Eurozone

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.

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Review of 2014 Outlook for 2015

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.

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Is it really a worry?

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.

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Where are we Headed Globally?

Wednesday, October 29, 2014

Hamish Douglas, majority owner and chief investment officer of Magellan Global, is a very well respected member of the investment community in Australia. His assertions are accurate more often than not.....

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Centrelink Change in Assessment

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.

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US Economy and Interest Rates

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.

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Calm Before the Storm

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.

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The Structural Changes Facing Australia

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.

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Considering aged care?

Tuesday, June 10, 2014

Major changes to aged care that take effect on 1 July 2014 may result in higher ongoing care fees. If you or a family member needs to move into aged care soon, now is the time to start planning.

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2014 Federal Budget

Tuesday, June 10, 2014

Australia is not really in a budget crisis. The budget deficit does not come anywhere near the 10% of GDP plus levels that sparked concern in the US, parts of Europe and Japan.

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2014 Economic Outlook video

Wednesday, December 18, 2013

This economic update came through to our office this week and there’s plenty of intelligent content - it is a bit dry in its delivery but the content is relevant and the outlook is positive.

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US economy reinventing itself again

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.

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No taper for US ... for now

Thursday, September 19, 2013

The Fed’s decision not to taper reflects a desire to see stronger US economic growth and guard against uncertainties around coming US budget discussions.

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2013 Australia election preview

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.

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Indian field trip

Friday, February 01, 2013

We visited Bangalore, Chennai, Ahmedabad, Chandigarh, Delhi and Agra in six days. It is said that for a foreigner to understand India is impossible, I concur!

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Africa rising

Friday, February 01, 2013

Ten to fifteen years ago it was common to be asked, “What about Africa?” At the time one would grimace and enter into a tirade about its many shortcomings. The time has now come.

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