Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 333

Welcome to Firstlinks Edition 333

  •   20 November 2019
  • 1
  •      
  •   

This week, JP Morgan downgraded its global growth outlook for 2020 by 0.2% to 2.3%, blaming 'population ageing'. Then Treasurer Josh Frydenberg said:

"It is estimated that the ageing of the population will reduce annual average real growth in revenue by 0.4 percentage points ... this equates to an annual cost to the budget of around $36 billion ... As our ageing population puts pressure on our health, aged care and pension systems, we need to develop policies that respond effectively to this challenge."

This sounds like a new policy agenda, but the Government has ruled out many changes which might be electorally unpopular. Without heavy lifting and tough-to-sell policies, we are left with:

"However, with Australians in work currently undertaking 80% of their training before the age of 21, this will have to change if we want to continue to see more Australians stay engaged in work for longer."

'Work longer' is hardly a breakthrough policy. Last week's survey on attitudes to generational inequity was particularly timely. While I am not so brazen to claim Firstlinks created two debates in mainstream media, our recent surveys were well ahead of the curve.

The 'OK Boomer' survey received the most personal and heartfelt feedback we have ever received. The 1,800 responses included over 600 comments, many describing the decades of work and sacrifice required to build retirement independence. Pre Boomers and Boomers reveal their years without holidays, working multiple jobs, 18% interest rates and no dining out (although some reminded me of the legendary 'Four Yorkshiremen' sketch. 'Luxury'). Younger generations lament missing the major city property booms, and many will need parental assistance. Leisa Bell summarises the poll results, with complete comments in a PDF report. More feedback welcome.

The other survey on the home in the pensions assets test has also become more widely discussed, although the Treasurer has ruled it out. Our survey results are here. New data from the ANU shows of the $50 billion in total pensions paid each year, $37 billion goes to home owners and $6 billion is paid to home owners in houses worth over $1 million.

Total pensions paid ($billion) by house value and tenure type, 2019-20


Source: ANU Centre for Social Research and Methods, 28 October 2019

We reprise a classic article with Nobel Laureate, Robert Merton, including his surprising views on pensions and reverse mortgages.

Our Interview Series continues with Peter Meany of First Sentier Investors discussing infrastructure hot spots. There are 13 listed infrastructure stocks in Australia (value $72 billion) but 350 worldwide (value $2.4 trillion). The case for investing in global infrastructure is strong.

After a good year, the All Ords Price Index all-time high of 6958 is within striking distance, and the US is in its longest and biggest bull market run in history, up about 450% since its trough on 9 March 2009.

So it is welcome, as Kate Howitt shows, that some semblance of reality and price rigour is being enforced, with active managers refusing to accept over-hyped and over-valued new issues.

We also have reality checks from both Peter Moussa, who sees room to run further but the final steps of the bull are nearing, and leading futurist Phil Ruthven, who describes the new world order as we head into the uncertainties of 2020 and beyond. The Sponsor White Paper from Neuberger Berman reports the most recent meeting of its Asset Allocation Committee.

Early December will be a massive moment for large super funds, as APRA will release its 'heat maps' judging MySuper funds. Dark red is bad. Raewyn Williams explains APRA is also looking for greater innovation and funds must overcome internal barriers to creative solutions.

APRA's Helen Rowell gave a sneak peak at the heat map in this presentation, and warned:

"Unlike a sea of numbers on a spreadsheet, a row of red across the heatmap sends a message so clear and strong it nearly jumps off the screen."

Example of a MySuper heat map on investment performance


Finally, on the subject of Firstlinks leading the debate, the AFR ran a long article on Wednesday called, 'LICs in the spotlight over returns'. Chris Cuffe covered this issue in detail in this 2017 article, pointing out the inadequate reporting adopted by most LICs.

 

Graham Hand, Managing Editor

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

 

banner

Most viewed in recent weeks

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Australian house price speculators: What were you thinking?

Australian housing’s 50-year boom was driven by falling rates and rising borrowing power — not rent or yield. With those drivers exhausted, future returns must reconcile with economic fundamentals. Are we ready?

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Welcome to Firstlinks Edition 627 with weekend update

This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.

  • 4 September 2025

Latest Updates

Shares

Why the ASX may be more expensive than the US market

On every valuation metric, the US appears significantly more expensive than Australia. However, American companies are also much more profitable than ours, which means the ASX may be more overvalued than most think.

Economy

No one holds the government to account on spending

Government spending is out of control and there's little sign that Labor will curb it. We need enforceable rules on spending and an empowered budget office to ensure governments act responsibly with taxpayers money.

Retirement

Why a traditional retirement may be pushed back 25 years

The idea of stopping work during your sixties is a man-made concept from another age. In a world where many jobs are knowledge based and can be done from anywhere, it may no longer make much sense at all.

Shares

The quiet winners of AI competition

The tech giants are in a money-throwing contest to secure AI supremacy and may fall short of high investor expectations. The companies supplying this arms race could offer a more attractive way to play AI adoption.

Preparing for aged care

Whether for yourself or a family member, it’s never too early to start thinking about aged care. This looks at the best ways to plan ahead, as well as the changes coming to aged care from November 1 this year.

Infrastructure

Renewable energy investment: gloom or boom?

ESG investing has fallen out of favour with many investors, and Trump's anti-green policies haven't helped. Yet, renewables investment is still surging, which could prove a boon for infrastructure companies.

Investing

The enduring wisdom of John Bogle in five quotes

From buying the whole market to controlling emotions, John Bogle’s legendary advice reminds investors that patience, discipline, and low costs are the keys to investment success in any market environment.

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.