Global companies offer investment opportunities not available on the ASX. Coming out of COVID, strong trends are accelerating or reversing, creating potential on both the buy and sell sides of a long short fund.
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The two 'known unknowns' of 2022
In history there are decades where not much happens, and there are months where decades happen. Covid has had far reaching effects on how economies function, where we work and how firms do business, and that process is on-going.
While the dust has not fully settled, the early picture emerging in the post-pandemic economy is that household behaviour, labour markets, correlations between asset classes, and the sensitivity of all those factors to policy changes, have notably changed. These factors have, in turn, altered the growth and price trends in most economies, and this will have significant implications for risk and return dynamics within portfolios going into 2022 and beyond.
Five reasons to expect a cooling in the Australian property market and falling prices in 2023
Key Points:
After a 22% rise in Australian home prices this year, they are expected to slow to 5% growth in 2022 with prices likely to fall 5-10% in 2023.
The main drivers behind the slowdown are: worsening affordability; rising supply; rising rates; macro prudential tightening; & a rotation in spending away from housing.
The main risks on the downside are another big covid set back or faster rate hikes & the main risk on the upside would be a fast return to pre-covid immigration.
Highlights of reader tips for young investors
In this second part on the reader responses with advice to younger people, we have selected a dozen highlights, but there are so many quality contributions that a full list of comments is also attached.
Shopping the online sales? Protect yourself and know your rights
Online shopping can be a convenient way to buy the things you want. Know how to protect yourself online, and what to do if you don't get what you pay for.
Firstlinks survey: the first 100 tips for young investors
From the hundreds of survey responses, we will select them in blocks of 100 over several weeks to help manage your time. There are consistent themes in here from decades of mistakes and successes.
COVID-19 support payments are ending: Here's what to do
For more than 2.1 million Aussies, the federal government’s COVID-19 support payments offered a lifeline through the latest pandemic lockdowns. Now they’re being wound back as vaccination rates increase. If your income has been affected, here are some tips and resources to help you manage the transition.
Central banks – including the RBA and Fed – gradually removing monetary stimulus is more good news than bad
The key points are as follows:
The march of central banks towards removing monetary stimulus is continuing with the RBA bringing forward its guidance regarding the first rate hike and the Fed set to commence tapering. We expect both to start raising rates later next year.
The shift towards monetary tightening signals slower more constrained share market returns – but the trend should remain up as the impact of monetary tightening is offset by economic recovery & higher profits, monetary policy is still easy and will be for a while & bull markets usually only end when monetary policy is tight.
Compound interest is like magic - and it's an investor's best friend
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
Compound interest is an investor's best friend.
The higher the return, the greater the investment contribution and the longer the period the more it works.
To make the most of it, ensure an adequate exposure to growth assets, contribute early and often to your investment portfolio and find a way to avoid being thrown off by the investment cycle.
Central banks - including the RBA and Fed - gradually removing monetary stimulus is more good news than bad
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
The march of central banks towards removing monetary stimulus is continuing with the RBA bringing forward its guidance regarding the first rate hike and the Fed set to commence tapering. We expect both to start raising rates later next year.
The shift towards monetary tightening signals slower more constrained share market returns - but the trend should remain up as the impact of monetary tightening is offset by economic recovery & higher profits, monetary policy is still easy and will be for a while & bull markets usually only end when monetary policy is tight.
Rising bond yields complicate the COVID recovery
Investment returns have defied initial expectations set in the early stages of the Covid pandemic, but where to from here? Which asset classes offer the best opportunities?
RBA signals the end of ultra-cheap money. Here’s what it will mean
The Melbourne Cup day RBA meeting confirms the cessation of the 'yield control' strategy that's been in place since July. What might this signal for interest rates in the near term?
Click here to know more
What’s the truth about stagflation?
Stagflation occurs when economic growth slows (stagnation) and prices rise (inflation), and while this scenario has been evident for a while now, is it really the same as the last time, over 40 years ago?
How scammers get you to invest? Reduce your chance of getting caught
Be suspicious of anyone that offers you easy money. Scammers are skilled at convincing you that the investment is real, the returns are high and the risks are low. But there's always a catch.
Science and medicine appear to be getting the upper hand of coronavirus - implications for investors
There are increasing signs that science and medicine are getting the upper hand against coronavirus: new global cases are in decline; vaccines are working; half the global population and 73% of Australians have had at least one vaccine dose; and there are more treatments for coronavirus.
Key to watch will be whether hospitalisations in response to any resurgence in cases remains subdued.
Coronavirus coming under better control means a continuation of the economic recovery and supply constraints starting to come under control both of which are positive for shares, although the latter will take time.
The worry list for shares - how worrying are they?
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
It's still too early to say that the pull back in share markets is over. Some of the worries around US fiscal policy and politics, China, global supply constraints and central banks likely have further to run and could see the correction go further.
Historically the main driver of whether we see a correction or a mild bear market, as opposed to a major bear market, is whether we see a recession. While it may take time, ultimately, we see the current worries being resolved in a way that does not severely threaten global or Australian growth.
So, we continue to see the broader trend in global and Australian shares remaining up once the correction runs its course.
Planting the seeds of wealth in Spring
As we emerge from the cold of Winter, Springtime often inspires us to relish in the sunshine and enjoy a spot of gardening to reap the rewards of the season. Our finances can also benefit from the same kind of attention.
9 ways to position the business of today for tomorrow
David Gonski is one of Australia's most-respected business leaders and Chancellor of UNSW. In this talk to the Australian Graduate School of Management, he describes nine lessons for long-term business success.
Know more of Gonski’s future-proofing insights here
Why do investors earn less than the funds they invest in?
Investors with a consistent investment approach which avoids chasing performance should reap rewards over time. A recent US study reveals a persistent gap between reported returns and what investors actually receive.
Financial Planning Week 2021
Financial Planning Association of Australia
Live your today, plan your tomorrow
A financial plan gives you the confidence to get through today and prepare for the future, no matter what life throws at you.
Celebrating the 21st Financial Planning Week in Australia from 4 – 9 October 2021, joining forces with global celebrations of World Financial Planning Day on Wednesday 6 October and World Investor Week from 4 – 9 October.
NEW RESEARCH
What are the money and life issues Australians are facing 18 months since the COVID-19 pandemic started? How has this period of time impacted people’s finances?
The FPA has commissioned research, FPA Money & Life Tracker: Freedom edition, to determine the impact of COVID-19 and the consequent lockdowns on Australians’ work income, financial habits and outlook.
Here are some interesting insights from this year’s research report FPA Money & Life Tracker: Freedom edition:
The top financial goals of Australians over the next 12 months are:
Hit a savings goal – 52.4%
Pay for a holiday – 44.4%
Pay off mortgage – 32.4%
Start investing – 16%
For Australians who see a financial planner
11% increased contact with their financial planner in response to the pandemic
6.5% are embracing digital platforms to receive financial advice
Interestingly, the top three changes Australians made in response to the pandemic include:
Being more frugal about lifestyle choices – 44.7%
Increasing savings – 43.9%
Focused on paying down debts as a priority – 41.3%
This year’s research follows on from FPA’s 2020 Money & Life Tracker: COVID edition, a report which revealed the financial concerns of Australians, their experience of money-related stress and changes in financial behaviour they’d made in response to the financial consequences of the first year of the pandemic.