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Growth is fuelled by unprecedented injections of liquidity which are now being withdrawn, and investors should expect future returns to be lower, even if a recession or correction is not severe.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

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

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.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

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.

Latest Updates

Investment strategies

Trump's US dollar assault is fuelling CBA's rise

Australian-based investors have been perplexed by the steep rise in CBA's share price But it's becoming clear that US funds are buying into our largest bank as a hedge against potential QE and further falls in the US dollar.

Investment strategies

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Property

Soaring house prices may be locking people into marriages

Soaring house prices are deepening Australia's cost of living crisis - and possibly distorting marriage decisions. New research links unexpected price changes to whether couples separate or silently struggle together.

Investment strategies

Google is facing 'the innovator's dilemma'

Artificial intelligence is forcing Google to rethink search - and its future. As usage shifts and rivals close in, will it adapt in time, or become a cautionary tale of disrupted disruptors?

Investment strategies

Study supports what many suspected about passive investing

The surge in passive investing doesn’t just mirror the market—it shapes it, often amplifying the rise of the largest firms and creating new risks and opportunities. For investors, understanding these effects is essential.

Property

Should we dump stamp duties for land taxes?

Economists have long flagged the idea of swapping property taxes for land taxes for fairness and equity reasons. This looks at why what seems fairer may not deliver the outcomes that we expect.

Investing

Being human means being a bad investor

Many of the behaviours that have made humans such a successful species also make it difficult for us to be good, long-term investors. The key to better decision making is to understand what makes us human and adapt.

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.