Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 269

Cuffelinks Newsletter Edition 269

  •   31 August 2018
  •      
  •   

On some measures, the US equity market is experiencing its longest bull market in history. Next week, I will chair a session at the Australian Institute of Superannuation Trustees' Annual Investment Conference called, "When is the next downturn coming?" Fortunately, I am not presenting because "I haven't got a clue" does not sound good. At last week's Portfolio Construction ForumMichael Blayney, Head of Multi-Asset at the Pendal Group, presented data showing expert strategists do no better than a coin toss in predicting market turns.

But increasingly, the big names of worldwide investing are warning that we're much closer to the end of the bull run than the beginning. One of our favourite investors, Howard Marks, offered his number one piece of investment wisdom on market cycles in a tweet a few days ago:  

   


The US market might feel like an aging bull, but the S&P500 has reached a new high, up 321% (or 415% including dividends) since 2009. Jon Boorman from Broadsword Capital has been tracking the comments made by famous bears in the chart below, which you can click for more detail. Remember the headlines grabbed by RBS at the start of 2016 when they told investors to "sell everything"?



Growth is fuelled by unprecedented injections of liquidity which are now being withdrawn, and investors should expect future returns to be lower, even if a recession or correction is not severe. Jason Orthmanand Mark Arnold look at the global economy's headwinds.

Royal Commission push back

The Commission has firmly placed the superannuation industry, especially retail funds, on the defensive, and the 200-page Closing Submission issued last Friday highlights potential criminal charges. But in a rare legal counter, Allens lawyers has issued some opposing opinions:

"When we went to law school, we were told that before someone could be found to breach a duty of care, the standard of care required had to be identified. In the case of superannuation trustees, it is the standard of a prudent superannuation trustee. The submissions do not say anything about what that standard means. They appear to be saying that whatever it means, the relevant trustees may not have satisfied it ... Contrary to what Counsel Assisting appear to be implying, the facts do not speak for themselves."

The Royal Commission and regulators will have a far-from-clear run through criminal proceedings. Furthermore, new Prime Minister Scott Morrison abolished the cabinet portfolio position of Revenue and Financial Services, rolling it into Treasury, but Josh Frydenberg will have more things to worry about than new superannuation regulations.

Don't ignore real (inflation-adjusted) returns

Two articles this week are reminders to consider investment performance in real terms, and it's sobering to see Ashley Owen's long-term chart of the All Ordinaries index adjusted for inflation. It often goes decades without reaching new highs, and is a long way off its 2009 peak despite what the headlines will say when we reach the nominal high of 6,873 again.  

Blockchain and cyber are creeping into our lives

In some good news for CBA, it has just led the world's first public bond created and managed using only blockchain technology to test decades-old sales practices. While blockchain and cyber remain arcane to many, Michael Collins sheds light on the opportunities and threats in blockchain and cyber investment opportunities are opened by Tamas Calderwood

Emerging markets, tax planning

Two more important articles. It's surprising how few people consider the tax-effectiveness of their estate after working all their lives to build and preserve personal wealth, as Matthew Collins explores. Then Jonathan Rochford shows how the rush to better yields in emerging markets debt has hit rocky ground, in a warning to all of us about chasing yields.

The McKinsey Global Institute estimates the world needs to spend about US$4 trillion a year on infrastructure, and no doubt this amount has risen after the Genoa bridge disaster. This week's White Paper from UBS Asset Management and CBRE Clarion Securities updates us on the opportunities.

The comprehensive Bell Potter Quarterly Review attached below shows Listed Investment Company (LIC) new raisings plus discounts and premiums, but check latest prices on the ASX for updates. 


Graham Hand, Managing Editor

 

Edition 269 | 31 Aug 2018 | Editorial | Newsletter

 


 

Leave a Comment:

banner

Most viewed in recent weeks

Australian house prices close in on world record

Sydney is set to become the world’s most expensive city for housing over the next 12 months, a new report shows. Our other major cities aren’t far behind unless there are major changes to improve housing affordability.

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Latest Updates

Planning

Will young Australians be better off than their parents?

For much of Australia’s history, each new generation has been better off than the last: better jobs and incomes as well as improved living standards. A new report assesses whether this time may be different.

Superannuation

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Investment strategies

A steady road to getting rich

The latest lists of Australia’s wealthiest individuals show that while overall wealth has continued to rise, gains by individuals haven't been uniform. Many might have been better off adopting a simpler investment strategy.

Economy

Would a corporate tax cut boost productivity in Australia?

As inflation eases, the Albanese government is switching its focus to lifting Australia’s sluggish productivity. Can corporate tax cuts reboot growth - or are we chasing a theory that doesn’t quite work here?

Are V-shaped market recoveries becoming more frequent?

April’s sharp rebound may feel familiar, but are V-shaped recoveries really more common in the post-COVID world? A look at market history suggests otherwise and hints that a common bias might be skewing perceptions.

Investment strategies

Asset allocation in a world of riskier developed markets

Old distinctions between developed and emerging market bonds no longer hold true. At a time where true diversification matters more than ever, this has big ramifications for the way that portfolios should be constructed.

Investment strategies

Top 5 investment reads

As the July school holiday break nears, here are some investment classics to put onto your reading list. The books offer lessons in investment strategy, financial disasters, and mergers and acquisitions.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.