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Tuesday, 29 September 2020
Recently trending Who's next? Discounts on LICs force managers to pivotFour simple things to do right nowWelcome to Firstlinks Edition 374Reporting season winners and losers in listed property trustsHave stock markets become a giant Ponzi scheme?
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For many global tech companies, COVID has boosted their revenues and pushed share prices to all-time highs. We are on the cusp of amazing technical advances and there are plenty of new opportunities.
For exclusive articles and research papers from our Sponsors, click here.
As fewer professionals actively research the merits of a company’s prospects, stocks become disproportionately driven by capital flows. Prices disconnect from fundamentals and there's no better example than Tesla.
Not every retiree needs to gun for higher returns, but a conservative portfolio can court its own risks, especially with bond rates so low. But some retirees prefer to settle for a lower income.
As more Australians tilt their investments to global equities, they often overlook the exchange rate risk and fees. The move from US57 cents to US73 cents in six months shows the unhedged impact.
The recovery from COVID-19 is looking more like a K-shape, with some companies doing well while others struggle. The pandemic seems more akin to a black swan, exogenous shock than a structural downturn.
It's often overlooked how wealthier couples can fall back on the age pension if a market loss hits their portfolio. The reassurance is never greater than in a financial (and now epidemic) crisis.
We asked our readers whether the government should proceed with the legislated increase in the superannuation guarantee and the wind-back of JobKeeper. One issue was clear-cut, the other more divided.
We discover which asset classes you have been investing in during the pandemic, how portfolio values have changed, and also your outlook on market recovery. Much diversity of opinion.
We asked readers to tell us how they have been personally affected during the COVID pandemic and what they thought would be some enduring consequences.
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Welcome to Firstlinks Edition 376
The US tech index, the NASDAQ, peaked on 2 September 2020 at 12,058 and three weeks later closed at 10,632. On the same days, Apple hit US$137.98 and then fell to US$107.12. These falls of over 10% and 20% seem high but both were simply returning to their early August levels. It's hardly a rout when a month's gains are given back. The bigger issue is whether such stock corrections will scare off the retail 'Robinhood' traders.Read More.
SMSFs come with an administration burden underestimated by many. For example, did you know trustees need to document a member’s decision to take the reduced pension minimum under the new COVID rules?
On the surface, a diversified fund looks the same as an SMSF with the same asset allocations. But to fund retirement, a member must sell units in the fund, whereas the cash balance is used in an SMSF.
We asked our readers for their views on the government's early access to superannuation. Most agreed with the policy but not with the ease of access. Here are your comments from all sides.
Markets have recovered in the last six months but most investors remain nervous about the economic outlook. Morningstar analysts provide four quick tips on how to navigate this uncertainty.
COVID-19 and the events of 2020 show why, more than ever, SMSF trustees need to prepare for the ‘unexpected’ by having an Enduring Power of Attorney in place. A Power of Attorney is not enough.
COVID-19 pushed many SMSF trustees to change their asset allocation, but some of the adjustments are surprising. In the GFC, there was a surge of new SMSFs as investors lost confidence in fund managers to protect them.
Trump or Biden? Our readers make a nailbiting call, while your predictions for the ASX300 over the long term show optimism while flat over the short term. The best insights come from the hundreds of revealing comments.
The second wave of COVID-19 sweeping Victoria and the resulting lockdown have taken a huge toll on the state's economy and its population. Was the government's reaction heavy-handed or necessary?
57 million people die every year, including over 3 million from respiratory diseases. Why is COVID-19 allowed to panic nations around the world and destroy so many businesses and jobs?
With historic falls in greenhouse gas emissions during the COVID-19 pandemic, we have a unique opportunity to construct a recovery that ensures a stronger economy while minimising carbon emissions.
With signs that the economic recession will not be as deep as first feared, many companies will emerge strongly with robust business models. Here are the sectors with the best opportunities.
The growth in wealth and aspirations of middle-class Chinese may become a 'consumer of last resort' for the world economy, but to earn that status, China must avoid a ‘trap’ among other challenges.
The boards and managers of six high-profile LICs, frustrated by their shares trading at large discounts to asset value, have embarked on radical strategies to fix the problems. Will they work?
A global financial casino has been created where investors ignore realistic valuations in the low growth, high-risk environment. At some point, analysis of fundamental value will be rewarded.
With gold now on the radar of individual investors, SMSFs and institutions, here's what you need to know about the choices between gold bars, gold ETFs and even gold miners, with Jordan Eliseo.
Many property trust results are better than expected, with the A-REIT sector on a dividend yield of 4.8%. But there's a wide variation by sector and the ability of tenants to pay the rent.
While valuations for large tech stocks are now high, investors don’t need to pay big prices on stocks with technolgy advantages if they are prepared to dig a little deeper. Here are three worth checking.
Based on a long investing career, the author sets out his beliefs without attempting to justify them here. Readers can agree or disagree. It's his guide for friends and family with an actionable variation for risk appetite.
Reductions in loan repayments, either deferrals or failing to opt out of lower payments, seem like a good idea. But they are expensive and should only be adopted if the borrower needs the money.
Aged care should not be narrowly defined, as opportunities include home care, granny flats, retirement villages, land lease communities and residential aged care. Take advice and don't rush it.
Simpler tax arrangements for investments are a key benefit of separately managed accounts, where after-tax outcomes vary from other vehicles such as managed funds and direct equities.
The use of discounted pricing by insurers to attract new business is unsustainable and leaves existing policyholders on higher premiums for what is essentially the same product.
The best way to preserve your SMSF’s favoured status is to make sure the fund’s annual return reaches the ATO on time. There are new rules this year that every SMSF trustee should know.
We often focus on the implications for financial security of being unable to save enough for a comfortable retirement, but mental wellbeing is as important. Financial advice can help.
It's now well established that ethical and sustainable investing enhances returns, but as fund managers jump aboard, what is required to build principles firmly into all portfolios?
A diversified share portfolio should deliver 6% with franking, versus 1% on a term deposit. Should an investor accept the risk of shares during a recession and pandemic when interest rates are so low?
Citi's clients tap into their own views to find investments that suit their portfolios, often working across global boundaries. It's a search for solutions in a world with no risk-free returns.
Rob Arnott is a leading researcher, fund manager and academic often quoted in US media. We chatted at a moment in time when President Trump must make some critical calls on coronavirus.
While coronavirus has brought into sharp focus the risks in bond portfolios, markets are always changing. Relative value and risks must be constantly watched as opportunities are presented.
There are many ways to value a company, but the most popular is to estimate the future cash flows and discount them to a present value using a chosen interest rate. Does it follow that when interest rates fall, companies become more valuable? Perhaps, but only if the cash flows remain unchanged, and in a recession, future earnings are more difficult to sustain. What do Buffett and Douglass and 150 years of data say?
Suddenly, it's the middle of September and we don't hear much about 'snap back' anymore. Now we have 'wind backs' and 'road maps'. Six months ago, I was flying back from Antarctica after two weeks aboard the ill-fated Greg Mortimer cruise ship, and then the world changed. So it's time to take your temperature again. Our survey checks your reaction to recent policies and your COVID-19 responses.
It was a milestone for strange times last week when the company with the longest record in the Dow Jones Industrial Average (DJIA) index, ExxonMobil, once the largest company in the world, was replaced by a software company, Salesforce. Only one company in the original DJIA exists today. As businesses are disrupted, how many of the current DJIA companies will disappear in the next decade or two?
With hindsight, we are all excellent 'shoulda' investors. Looking back during the pandemic, opportunities look obvious. Retail investors who rely on professional fund managers must hope that late March presented a once-a-decade moment for investment teams to stop watching screens and reading broker reports and contemplate deeply a new future for target companies.
The pandemic-induced preoccupation with health problems has eased enough to allow news space for superannuation to regain its place as a political football. Senator Jane Hume, the minister responsible for super, says further reform is "in the wings" and "a more efficient default system" is under development. Plus she's in a super stoush with Paul Keating.
It's easy to oscillate between vaccine optimism and pessimism depending on the most recent authoritative report, but this week, the World Health Organisation took a longer-term view. It warned that we live in a biological world and we are actively creating breaches of the animal/human species barrier. We are heightening the risk of more COVIDs.
The traditional 4% rule was designed to ensure retirees do not run out of money, but low interest rates and expensive equity markets question the sustainability of the level. What are the alternatives?
Many people were financially unprepared for a pandemic, but it is women who are suffering most because they earn less, have interrupted careers and have less risk-taking capacity.
Investors who stick with the same asset allocations as in the past will likely fall short of their goals. The 'right' allocation is personal and holding more equities depends on risk capacity.
How does an analyst value a stock which has traded between $8 and $50 in two months? Regardless, Afterpay has delivered Australia's youngest billionaire, and thousands have enjoyed the wild ride.
Chris has many years of experience in building successful wealth management practices.
Noel Whittaker is one of the world's foremost authorities on personal finance.
Phil Ruthven is the founder and director of IBISWorld, Australia's best-known business information, forecasting and strategic services corporation
Paul John Keating is a former Australian politician who served as the 24th Prime Minister of Australia, in office from 1991 to 1996 as leader of the Labor Party.
Nasdaq 100 ETF reaches $1 billion milestone.
focuses on Asia Pacific with new infrastructure debt strategy.
unifies under one brand globally.
No amount of experience as an adviser specialising in aged care prepared Alex for the actual events her father faced inside an aged care facility. It might be about care, but it's a profit-making business.
Your SMSF story reflects your life's journey, and real people telling real stories encourage the popularity of this structure. Retail and industry funds struggle with this.
The costs of owning an apartment for short term rental consume most of the income, leaving uninformed investors blind to actual returns until the statements roll in. The practice of marketing gross yields is misleading.
Make sure you're not focussing on minor investment problems while giving short shrift to the game-changers. This pyramid describes the important decisions and it might surprise what comes last.
State Street Global Advisors is a pioneer in the Australian ETF market, but aggressive pricing from new rivals has eroded its competitive edge.