Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 278

Cuffelinks Newsletter Edition 278

  •   2 November 2018
  •      
  •   

Last week's edition of The Economist featured Australia, with these words:

"Our cover this week holds out Australia as an example for the world. Rising incomes, low public debt, an affordable welfare state, popular support for mass immigration and a broad political consensus: in most of the rich world such blessings are a distant dream, in Australia they are a proud reality. The country has been growing for 27 years without a recession. The public finances are in excellent long-term shape. Half of Australians are either immigrants or the children of immigrants."

The article on "the most successful rich economy" is here. Does it feel so wonderful from this side of the planet? Surveys reveal 60% of Australians want cuts to immigration, we have the world's highest private debt to GDP ratio which the Reserve Bank has highlighted as a major risk, private sector wages have not risen for six years, and we've had five Prime Ministers since 2013. If we have a "broad political consensus", we make little progress on tax reform, climate change and power prices. Just today, UNICEF issued The Children's Report, showing one in six children in Australia live in poverty.

Stephen Grenville of the Lowy Institute says The Economist does not have a great track record on Australia. In 1995, four years into the 27 years of expansion and just after Mexico had experienced a currency collapse and deep recession requiring an IMF bailout, The Economist predicted: "Australia - the next Mexico".

Returning from overseas

On a brighter note, it's always good to come home and I've just returned from Europe. Italy is portrayed here as a basket case but it was vibrant and busy. Malta is booming, overrun with tourists. I've written a note on three points that struck me. BTW, topping up with €1,000 cash before the trip cost me $1,640 at money changer UAE Exchange, which at the same time would have cost $1,740 at CBA and a terrible $2,050 at the airport. How many people spend hours researching hotels and flights but little time on the best way to make the payment? 

When playing tourist, it's easier to ignore the noise of the stock market. It seems to matter less that the S&P500, NASDAQ and S&P/ASX200 were all down around 10% from their peak. This must be how Warren Buffett feels when falls become buying opportunities. 

Elsewhere in this week's edition ...

Roger Montgomery gives an excellent summary of the coming 5G networks and potential investment opportunities. For those nervous investors who have not been distracted by holidays and are worried about the market, Tim Fuller gives a simple guide to investing for the long term. Nicole Connolly explains the consistency of infrastructure assets and particularly airports. 

The traditional relationship between US and Australian interest rates is currently reversed, and Stephen Cooper explains the ramifications. Douglas Isles laments the heavy focus advisers and their clients have on short-term performance and wants to change the conversation. 

Leisa Bell summarises superannuation research from Mercer showing changing work conditions and disengagement by millennials, while at the other end of the age spectrum, Julie Steed explains how to access super when faced with a terminal illness.

The new Alliance for a Fairer Retirement System, established in response to Labor's franking proposal, held its inaugural summit this week, and a summary of discussions is here. Jon Kalkman of the Australian Investors Association, who has written many excellent pieces in Cuffelinks on this subject, is the main author of this comprehensive paper to the Standing Committee holding an inquiry into the policy.

Our updated White Papers from Perpetual Investments show how volatility can bring opportunities and what factors caused the recent sell-off, plus with a more local focus, the inaugural edition of the Quarterly Market Insights from the Perpetual Multi Asset team.

To comment on any of the issues raised above, use the Have Your Say section.

Graham Hand, Managing Editor

For a PDF version of this week’s newsletter articles, click here.

 

  •   2 November 2018
  •      
  •   

 

Leave a Comment:

banner

Most viewed in recent weeks

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Division 296: the initial moves to make before the windows close

What if the best superannuation strategy isn't about earning more, but acting before your options disappear? Several overlooked planning windows are narrowing, with consequences that can last for decades.

The retirement scorecard: how many of these questions can you answer?

From the maths of retirement, estimating spending and picking the right asset allocation to survive a poor decade, here are the questions every retiree – current or future – should be able to answer for themselves.

Testamentary trusts: Treasury has picked the wrong reading

A decades-old estate planning tool has survived one tax crackdown only to be caught by another. The surprise isn't who the reform is targeting, but who could end up paying the price for drafting choices made years ago.

Higher yields are creating opportunities in global bonds

Bond markets are adjusting to a new reality, but not in the ways investors expect. With markets repricing and capital competing for attention, investors may need to rethink where resilience and opportunity lie. 

Will investors be better or worse off under new housing tax changes?

Housing tax reforms have sparked warnings of market turmoil and promises of greater fairness. But after modelling nearly two decades of property data, the results suggest winners and losers may not be who many investors expect.

Latest Updates

Superannuation

Superannuation’s structural failings

Politicians are fighting over access to super, but they may be arguing about the wrong thing. The system’s three fundamental flaws have been hiding in plain sight for decades, costing Australians far more than they realise.

Planning

The great wealth transfer myth

Why do some families preserve wealth for generations while others struggle to? As the great wealth transfer unfolds, the determining factor is often not the structure of the estate, but the preparation of those who will inherit it.

Investment strategies

What comes after bank hybrids?

For years, bank hybrids have been a cornerstone of portfolio income. With tens of billions of dollars now disappearing from the market, investors face a critical question: what comes next, and are the obvious replacements enough?

Investment insights from the US

What happens when knowledge becomes a commodity? The latest themes emerging from the US tech sector suggest AI could reshape company moats, disrupt incumbents and create winners and losers in unexpected places.

Investing

Can Berkshire thrive without Buffett?

Warren Buffett's departure marks the end of an era. But the more important question for investors is whether Berkshire's culture, discipline and capital allocation framework can survive without the man who built them.

Retirement

The Bengen 4% Rule: Lost in translation

For years, retirees have been told to focus on withdrawal rates. But the real question is far simpler: how many dollars can you safely spend? The answer may be very different from what conventional retirement wisdom suggests.

Interest rates

Super low interest rates came with side effects

For more than a decade, investors lived through an era of near-zero interest rates. With bond yields now surging, it's worth asking whether cheap money solved economic problems, or introduced a much larger set of risks.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 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.