Goodbye 2019, hello to a new decade. With the S&P/ASX200 price index up over 18% in 12 months, and the US Dow Jones up 24%, we'll be doing well if the market does half as well in 2020.
The early part of 2019 was dominated by the Financial Services Royal Commission, and then Labor's policies on franking credits, negative gearing and capital gains. Given the demographics of the Cuffelinks (now Firstlinks) audience, the surprise in the franking debate was not that our readers would be interested, but its high intensity. It soon became clear that many retirees did not consider themselves wealthy, and were relying on a refund of franking as part of their annual cash flow.
Meanwhile, financial markets marched on, and despite daily headlines on geopolitical risks, negative interest rates, Brexit and a slowing economy, stockmarkets delivered outstanding results, encouraged by investors seeking alternatives to cash and term deposits.
(Click on the blue headings to read the full article).
My Top 10 highlight articles
1. When it came picking out a franking article from the many in the archive, I chose one which will stand the test of time as a simple explanation, not focussing on the politics of 2019. The Labor policy is gone for now but it's important investors understand how franking works.
Franking credits made easy
Graham Hand | 20 February 2019
The simplest possible explanation of dividend imputation and franking, as the heated debate shows many people do not understand the basics.
2. I have met Howard Marks a couple of times, and I always enjoyed his explanations on risk and the simplicity of his communications. And who doesn't like a beer anology to make it even easier.
Marks and the tax system explained in beer
Howard Marks | 30 January 2019
In his latest memo to clients, Oaktree's Howard Marks quotes the popular 'beer' example to explain the tax system, and we reproduce it here.
3. In selecting one article about the Royal Commission, rather than rehash the findings, I chose a piece looking at what else the Commission may have covered, and perhaps some pointers to future work.
8 problems the Royal Commission missed
Graham Hand | 5 February 2019
The Royal Commission did good work but it is not above criticism: faced with limited time, it spent too long on some subjects and missed crucial issues that will impact millions.
4. All experienced investors have made costly mistakes, and it's valuable to heed the warnings.
My nine all-time essential investing lessons
Shane Oliver | 20 June 2019
In 35 years watching investment markets, some themes continue to repeat. Investors don't need to live through the same mistakes if they follow this list of lessons learned from studying markets.
5. When markets run strongly, some investment managers are left behind, and investors are often impatient. The business models of many were stretched to breaking.
10 reasons many fund managers are now blank spaces
Graham Hand | 10 July 2019
Where once the name plates of exciting new fund managers proudly displayed, now there are blank spaces. What is happening in the industry that so many talented people are closing the doors?
6. There's little doubt that Magellan has been the Australian funds management success story of the last decade, and their CEO, Hamish Douglass, always attracts attention when he speaks or writes.
13 of the best: reflections from an investor
Hamish Douglass | 31 July 2019
13 lessons from years of investing including how to find the right investments, how to let investments work for you, risk management and the best temperament.
7. Financial advisers generally had a tough year after the Royal Commission findings, and many are struggling for a new business model. It was therefore welcome to see an article showing how they can add value.
Advisers must step up and articulate their value
Jodie Hampshire | 31 July 2019
In a time where advisers are under pressure to demonstrate their value, the latest Russell Investments ‘Value of an Adviser’ report reveals investors gain around 4.4% per year through a quality advice partnership.
8. I have known Ashley for many years, and he often looks at the market with a unique perspective, drawing on an amazing database he personally maintains.
99% of listed companies disappear worthless
Ashley Owen | 6 August 2019
Think you can pick winners? A minority of listed Australian companies make a profit and most are speculative stocks that will eventually disappear, taking the dreams and money of investors with them.
9. Another author who readers do not always agree with, Peter advocates a portfolio dominated by quality industrial companies.
Most investors are wrong on dividend yield as income
Peter Thornhill | 11 September 2019
The current yield on a share or trust is simply the latest dividend divided by the current share price, an abstract number at a point in time. What really matters is the income delivered in the long run.
10. An issue sure to come back into the policy debate is the role of the family home in retirement incomes.
How to include homes in the age pension assets test
Anthony Asher | 30 October 2019
A reader speaks out about the inequity of ignoring own homes in the assets test for the age pension, plus a proposal on how it could work politically. Take our survey on the merit of the policy.
And finally, to round up to a neat dozen, I'll squeeze in two articles written by Graham late in 2019 which attracted a lot of attention. I've had a lot of younger people telling me how good my Boomer generation has had it.
OK Boomer: fessing up that we’ve had it good
Graham Hand | 13 November 2019
The pre-Boomer generations faced global wars and depressions, but Australians born after 1946 have enjoyed prosperity. Superannuation, education, strong markets and surging property prices locked in gains.
Sorry, there’s no real place to hide
Graham Hand | 4 December 2019
Billions of dollars of personal savings are flowing into 'fixed interest' funds, but do investors understand the risks? These funds have a place but they are not a short-term haven for worried retirees.
Chris Cuffe was a co-founder of Cuffelinks, the predecessor to Firstlinks (acquired by Morningstar in October 2019). Chris is Chairman and Founder of Australian Philnthropic Services, and sits on the boards or investment committees of many listed companies and family offices.