Flick Confreres & Associates

27/09/2020

As investors, it’s human nature to get caught up in the daily noise of why markets are rising and falling. Big falls, in particular, generally create panic and often fuel extended periods of heavy selling.

Even now, in a period when media coverage is dominated by events that have very uncertain outcomes, market volatility indicators are pointing to greater short-term instability.

The key is to switch off the daily market noise and to focus on your long-term investment goals.

Historical markets data shows that even though major events such as the Asian financial crisis, dotcom crash and global ­financial crisis resulted in sharp downturns, over the long term markets have delivered strong growth.

A $10,000 investment made into Australian shares in 1990 would have achieved an 8.9 per cent total return per annum over 30 years and, with the reinvestment of all distributions, grown to $130,457 by June 30, 2020.

Over the same time frame and using the same strategy, a $10,000 investment into the broad US market would have delivered a 10.3 per cent per annum return, and now be worth $186,799.

Successful investing revolves around having a well-planned and diversified strategy that’s aligned to your specific goals, and the discipline and resolve to stay the course, even during the most volatile investment times.

Volatility is always a fact of life on financial markets, but this year its been unprecedented. Thats not surprising, given whats going on in the world the list of factors continually driving all markets at the moment is pretty extensive.

22/09/2020

Australia’s share market suffered its first four-day fall since April as the global selloff in shares this month looked set to continue.

The S&P/ASX 200 index closed down 38.5 points or 0.7pc at a 3-month low close of 5784.10 after hitting an intraday low of 5763.2 amid underperformance from major sectors including Materials, Energy, Financials and Real Estate.

Good afternoon and welcome to Trading Day for Tuesday, September 22.

22/09/2020

US and global sharemarkets, including ours in Australia, are losing their risk appetite in the wake of the repercussions of COVID-19.

01/09/2020

MLC sale marks end of an error as banks exit wealth management

Two decades after the major banks piled into wealth management in an $18bn splurge, the sector has completed one of the great strategic U-turns in local corporate history after NAB’s sale of MLC.

The purchases of Colonial by Commonwealth Bank, BT by Westpac, ING by ANZ and MLC by NAB were united by a common purpose — using the sector’s ­distribution muscle to cross-sell wealth products and super­charge mandated superannuation flows.

The recent round of shameless exits also have a common purpose: simplicity.

Two decades after the major banks piled into wealth management in an 18bn splurge, the sector has completed one of the great strategic U-turns in local corporate history after NABs sale of MLC.

19/08/2020

The S&P 500 rose to an all-time high on Tuesday, capping off its incredible recovery from the coronavirus-induced sell-off that knocked it off its previous record back in February.

The S&P 500 rose to an all-time high on Tuesday, capping off its recovery from the coronavirus-induced sell-off that knocked it off its previous record.

14/08/2020

A detailed analysis of economy and sharemarkets and outlook to 2021 by IML. Worth investing the time to gain a better understanding on what is currently happening.

Looking at the sharemarket’s performance over the last few months, some would be tempted to assume that the worst of the economic damage inflicted by the COVID-19 virus is well behind us. Economically sensitive sectors like Banks and Resources have led the rally, while many of the strongest-perfor...

24/07/2020

When the Menzies government took office in December 1949, Australias public debt stood at 120 per cent of GDP. By the time Robert Menzies retired, on Australia Day, 1966, that proportion had dropped below 50 per cent. With the Treasurer on Thursday announcing eye-watering debt and deficits, the less...

23/07/2020

Unemployment is forecast to balloon to 8.75 per cent and Australia’s Australia’s real GDP will fall by 3.75 per cent this calendar year, as Josh Frydenberg releases his “harsh” July economic statement.

The Treasurer is now projecting the federal budget deficit will be $184.5bn in 2020/21 - the largest deficit since World War II - and net debt will be $677.1bn.

Unemployment is projected to peak at 9.25 per cent in the December quarter, before going down to 8.75 per cent in 2020/21

Unemployment is forecast to balloon to 8.75 per cent and Australias real GDP will fall by 3.75 per cent this calendar year, as Josh Frydenberg releases his harsh July economic statement.

14/07/2020

The head of the $98bn Magellan Financial has warned that it is “simply not true” that central banks and governments will be able to prevent contagion in financial markets if the coronavirus worsens and no effective treatment is found.

In Magellan’s annual investor letter sent to over 100,000 shareholders, chairman and chief investment officer Hamish Douglass details the risks faced by global financial markets, including a warning that investors were becoming overconfident and the economic shocks of the virus could last “years”.

The annual investor letter also included an interview with former Federal Reserve chair Janet Yellen, who concluded that if the health risks last a long time “there’s going to be a lot of scarring” of the global economy that precludes a V-shaped recovery.

Dr Yellen, who is an adviser to the funds manager, said the crisis could have huge and long-term impacts on the global economy and investment landscape as government support ends.

The head of the 98bn Magellan Financial has warned that it is simply not true that central banks and governments will be able to prevent contagion in financial markets if the coronavirus worsens and no effective treatment is found.

14/07/2020

Amid reports of another rush by people to access the second tranche of the Government’s hardship early release superannuation regime, Wealth Within’s Dale Gillham has pointed to the $54,000 long-run impact on people’s superannuation savings.

09/07/2020

Key lessons for investors from the last financial year
These include:

Maintain a well-diversified portfolio – while shares and listed property had a rough ride, bonds and exposure to global shares and foreign currency provided some stability.

Timing markets is hard – while it always looks easy in hindsight, getting out in February at the top and then getting back in March at the low would have been very hard to time.

Beware the crowd at extremes – as is often the case shares hit bottom in March at a time of extreme investor pessimism.

Turn down the noise – the noise around coronavirus is at fever pitch making it very hard to maintain focus on long term investing, so the best thing is to turn it down a notch.

Don’t fight the Fed – despite near zero interest rates and high public debt levels, policy stimulus can still be applied on a massive scale and still impacts investment markets.

The past financial year was poor for investors as coronavirus knocked economies into what is likely to be their biggest hit since the 1930s. Shares were hit hard, but the blow was softened by a strong rebound in the June quarter. This note reviews the last financial year and takes...

08/07/2020

Markets in the eye of the storm as second wave rises
Sarah Kendell 07 July 2020

Investors have likely not seen the worst of the COVID market sell-off, with the second wave impacts of the virus tipped to drive worse declines if previous economic crises are anything to go by.

Addressing a virtual media briefing on Tuesday, Randal Jenneke, head of Australian equities for global investment manager T. Rowe Price, said that while shares had made a speedy initial rally after the onset of the pandemic in March, much like the virus itself, market recovery would not be linear.

“In March we had the sharpest sell-off we’ve seen in many decades, and then we had the sharpest recovery. But we’re still early on to this event and I think it’s important to understand that while commentators are giving the impression we’re through the worst, I’ve got a different view,” Mr Jenneke said.

“This will unfold over a longer period of time, and we’re starting now to see the second round impacts of the crisis and the economic response as well.”

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