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 hereJon 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

Australian stocks will crush housing over the next decade, 2025 edition

Two years ago, I wrote an article suggesting that the odds favoured ASX shares easily outperforming residential property over the next decade. Here’s an update on where things stand today.

Building a lazy ETF portfolio in 2026

What are the best ways to build a simple portfolio from scratch? I’ve addressed this issue before but think it’s worth revisiting given markets and the world have since changed, throwing up new challenges and things to consider.

Get set for a bumpy 2026

At this time last year, I forecast that 2025 would likely be a positive year given strong economic prospects and disinflation. The outlook for this year is less clear cut and here is what investors should do.

Meg on SMSFs: First glimpse of revised Division 296 tax

Treasury has released draft legislation for a new version of the controversial $3 million super tax. It's a significant improvement on the original proposal but there are some stings in the tail.

Property versus shares - a practical guide for investors

I’ve been comparing property and shares for decades and while both have their place, the differences are stark. When tax, costs, and liquidity are weighed, property looks less compelling than its reputation suggests.

10 fearless forecasts for 2026

The predictions include dividends will outstrip growth as a source of Australian equity returns, US market performance will be underwhelming, while US government bonds will beat gold.

Latest Updates

Economy

Ray Dalio on 2025’s real story, Trump, and what’s next

The renowned investor says 2025’s real story wasn’t AI or US stocks but the shift away from American assets and a collapse in the value of money. And he outlines how to best position portfolios for what’s ahead.

Superannuation

No, Division 296 does not tax franking credits twice

Claims that Division 296 double-taxes franking credits misunderstand imputation: franking credits are SMSF income, not company tax, and ensure earnings are taxed once at the correct rate.

Investment strategies

Who will get left holding the banks?

For the first time in decades, the Big 4 banks have real competition in home loans. Macquarie is quickly gain market share, which threatens both the earnings and dividends of the major banks in the years ahead.

Investment strategies

AI economic scenarios: revolutionary growth, or recessionary bubble?

Investor focus is turning increasingly to AI-related risks: is it a bubble about to burst, tipping the US into recession? Or is it the onset of a third industrial revolution? And what would either scenario mean for markets?

Investment strategies

The long-term case for compounders

Cyclical stocks surge in upswings but falter in downturns. Compounders - reliable, scalable, resilient businesses - offer smoother, superior returns over the full investment cycle for patient investors.

Property

AREITs are not as passive as you may think

A-REITs are often viewed as passive rental vehicles, but today’s index tells a different story. Development and funds management now dominate earnings, materially increasing volatility and risk for the sector.

Australia’s quiet dairy boom — and the investment opportunity

Dairy farming offers real asset exposure, steady income and long-term growth, yet remains overlooked by investors seeking diversification beyond traditional asset classes.

Sponsors

Alliances

© 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.