Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 341

Welcome to Firstlinks Edition 341

  •   22 January 2020
  • 1
  •      
  •   

The majority of investors hold a diversified portfolio no more than half invested in equities. The share exposure often declines with age as retirees seek capital preservation, and even young people place their super in balanced funds. Delight in the noisy 'all-time highs' is far from universal, with millions of Australians missing the big gains. Stockmarket analysts live in a blinkered world of screens focussed on share investments, as one told AAP this week:

"The local bourse is on fire and then some! It's a thing of beauty and local investors are pleased as punch. Australia is historically a bit of a laggard compared to our US counterparts but we're mixing it up with the big boys at the moment."

Better to ignore the bluster and consider the words of Howard Marks in 2013:

"Another mistake that people often make is that they compare themselves with others who are making more money than they are and conclude that they should emulate the others’ actions ... after they’ve worked. This is the source of the herd behaviour that so often gets them into trouble. We're all human and so we’re subject to these influences, but we mustn’t succumb. This is why the best investors are quite cold-blooded in their professional activities ...

Too little scepticism and too much eagerness in an up-market – just like too much resistance and pessimism in a down-market – can be very bad for investment results."

The biggest investment news last week was the world's largest investor, BlackRock, moving away from thermal coal and making sustainable investing a new priority. As a major index provider under the iShares banner, it's a massive issue because the Big 3 index providers (BlackRock, Vanguard and State Street) now own on average 22% of a typical S&P500 company. The table below shows they own 18% of Apple, around 20% of US banks and up to 35% of some companies. Their actions will influence hundreds of companies, often behind closed doors.


Data compiled by Bloomberg.

Social trends guide investment results, and David James provides a detailed review of Australian demographics. The ageing and composition of our population point to both opportunities and traps. He explores our role in Asia, and on the same tack, Glenn Freeman reports on three large Australian companies whose fortunes depend on China.

Ashley Owen's amazing database demonstrates how much Australian shares have delivered in a diversified portfolio, and he reveals the four components that make up sharemarket returns. What drives your portfolio's performance? Then Richard Dinham shows why investing during retirement differs from saving in the earlier accumulation phase.

The selling fee debate on LICs and LITs shows no signs of abating, with Christopher Joye writing in The Australian Financial Review, " ...conflicted selling fees could determine the fate of the advice industry and the Treasurer's political future." Wow, there are 25,000 financial advisers out there that millions of Australians rely on. In a more sober assessment, Jonathan Rochford identifies three vital points everyone is missing, and I agree with him.

Olivia Long then provides guidance on early access to super for victims of the bushfires and other emergencies, and Dubravka Cecez-Kecmanovic explains that despite enthusiasm for the use of algorithms and AI, they will not lead to the impartial and efficient outcomes most are expecting.

And while the popular press frothed that Labor leader Anthony Albanese has dropped the previous franking credit proposal, all he actually said was: “We won’t be taking the same policy to the next election.” Which means that like the euthanasia laws, it could come back from the dead. 

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.