Inspiring, leading and continuously adapting to change is no easy feat and can often lead to change fatigue. Ciara Lancaster shares her six pillars for turning change fatigue into change success.
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Thoughts on the Market: The Fog of War
2022 is not very old and already it has seen a stock market correction, a 50bp flattening of the US yield curve and a major geopolitical crisis in Europe. Investors are contemplating the potential consequences of the Russian invasion of Ukraine, and the direct economic impacts here are minor as the world’s trade and financial linkages with Eastern Europe are very low. However, the indirect impact through higher commodity prices (energy, metals, and food) to consumer’s purchasing power is far more significant and simply adds more impulse to already well-established upward trend in global inflation, as well as downside risks to growth.
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Follow the market trajectory and stop the usual mistakes
It gives me pain to hear the finance industry telling people to invest in 'balanced' portfolios to reduce risk. At no stage do they ever tell people the opportunity cost so they repeat the same mistakes.
Memory loss, dementia and your money
Memory loss can make it difficult to stay in control of your money. Things like checking bank statements or investments, or paying bills may become challenging.
If you're starting to struggle, it's time to put some safeguards in place. A few simple steps will help you and your loved ones protect your money and prepare for the future.
Start planning
Appoint an enduring power of attorney
Update your will
Get your super in order
Sort out your important documents
Protect yourself from financial abuse
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Oliver's Insights – Investment outlook Q&A – inflation, interest rates, Russia & Ukraine, the risk of a share crash, house prices and other issues
The attached note covers the main questions investors commonly have regarding the investment outlook in a simple Q&A format. The key points are as follows:
Inflation will likely slow later this year but remain well above pre-pandemic levels over the medium term.
Wages growth is likely to pick up to 3% this year.
A Russian invasion of Ukraine risks a short term hit to shares followed by recovery over the next 3 to 12 months.
Australian home prices are likely to peak later this year followed by falls into 2024.
Oliver's Insights – Corrections, gummy bears and grizzly bears
Given the rough start to the year in share markets, the attached note looks at past bear markets in Australian and US shares. The key points are as follows:
While share market corrections and even mild bear markets are common, long and deep bear markets invariably require a recession at least in the US.
Global and Australian shares have had a good rebound from their January lows but could still fall further in the short term as risks remain high around monetary tightening and geopolitical tensions.
However, a deep bear market is unlikely as a US, global and/or Australian recession are unlikely to be imminent.
New online safety laws come into effect
Australians who are being subject to online abuse will be able to report incidents to the eSafety commissioner under sweeping new powers now in force.
New online safety laws will make social media giants remove posts deemed as bullying or abusive within 24 hours.
If the posts are not taken down, individuals could face fines of up to $111,000 or companies could be hit with a $555,000 fine.
Communications Minister Paul Fletcher said the new laws would target online trolls.
“We now have new protections for Australians who are subject to vicious, online abuse,” Mr Fletcher told the Seven Network on Monday.
“What we know is that people who are the victim of this, what they want most of all is to have the material taken down as quickly as possible.”
As part of the new laws, people who are abused or harassed online should first report the offending post to the social media company it was published on.
Should the company not take down the post, people would be able to report the incident to the eSafety commissioner, who has new powers to mandate the post be removed within 24 hours.
Deputy Prime Minister Barnaby Joyce said the social media companies needed to be held accountable for the content posted to their platforms.
“The vindictive nastiness has to be brought under control, and the people who have to control it are the people making money out of it,” he told the Seven Network.
“The premise should remain with the person who makes the money, and that is Facebook and Instagram.”
However, Labor backbencher Joel Fitzgibbon said the new laws would not have much of an impact.
“The impact of bullying on the playground is immediate, no matter where it occurs, but in the playground, you get kicked out of the play area,” he said.
“This is not kicking anyone off social media, I am not sure whether that is legally or technically possible.”
It comes as the government is holding a federal inquiry into online safety, where representatives from some of the world’s biggest social media companies have been questioned.
Other legislation is being debated on whether social media companies would be forced to identify anonymous trolls.
Andrew Brown
(Australian Associated Press)
The RBA ends bond buying - but remains "patient" on rates. We expect the first rate hike in August
The attached note looks at the RBA's first meeting for this year and the outlook for the official cash rate. The key points are as follows:
The RBA will end quantitative easing this month.
While it now sees unemployment falling below 4% and higher inflation it is prepared to be "patient" for now on rates.
We expect rate hikes to commence in August.
Ultimately, we see the cash rate rising to around 1.5 to 2% in the years ahead but it's a bit of guess and the RBA will only raise rates as far as necessary to cool inflation.
Rate hikes from later this year are unlikely to be enough to threaten the economic recovery but they will add to the slowdown in the property market where we see dwelling prices peaking later this year.
Oliver's Insights – Share market falls - seven things for investors to keep in mind
The attached note takes a look at the recent sharp falls in share markets and looks at seven things for investors to keep in mind. The key points are as follows:
Share markets have fallen in recent weeks on the back of worries about inflation, monetary tightening, the Omicron disruption and the rising risk of a Russian invasion of Ukraine.
Its too early to say markets have bottomed.
Key things for investors to bear in mind are that: corrections are healthy and normal; in the absence of a renewed recession share market falls may be limited; selling shares after a fall locks in a loss; share pullbacks provide opportunities for investors to buy them more cheaply; shares continue to offer an attractive income flow; shares often bottom at the point of maximum bearishness; and finally, to avoid getting thrown off a long-term investment strategy it's best to turn down the noise.
2022 – a list of lists regarding the macro investment outlook
The attached note takes a look at the continuing surge in global inflation pressures, notably in the US. The key points are as follows:
Inflation is placing increasing pressure on major central banks to remove monetary stimulus.
Inflation & rising interest rates will likely contribute to more volatile & constrained investment returns this year..
The long-term downtrend in inflation and interest rates since the early 1980s is likely to be over removing a tailwind for investment returns.
2022 - a list of lists regarding the macro investment outlook
The attached note provides a simple point form summary of key insights and views on the economic and investment outlook. The key points are as follows:
2021 saw strong investment returns with low volatility.
2022 is likely to see more constrained returns with increased volatility.
Watch: coronavirus and vaccines; inflation; the US mid-term elections; China issues; Russian tensions with Ukraine and the west; & the Australian election.
The leading 2022 themes for global mid-sized companies
As business fundamentals improve, the earnings recovery takes over as the primary driver of shareholder returns. The equity market is supported by its real earnings even with the inevitable share price falls.
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10 little-known pension traps prove the value of advice
Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.
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It’s time to reveal the 2021 X-Factor in investment markets
For 40 years, recording the market's X-Factor has become an obsession. In weighing up four big candidates for the most likely X-Factor emerging from 2021 and likely to hit in 2022, there is a clear winner.
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Five global trends point to buys and sells for 2022
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.