Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 343

Welcome to Firstlinks Edition 343

  •   6 February 2020
  • 1
  •      
  •   

Please note that some readers who should be linked to Edition 344 have been sent to this Edition 343. The correct link to the latest edition is here.

Apologies for the inconvenience.

 

This is Edition 343.

There are three words that most experts are unwilling to say. In complex circumstances with many unknowns, 'I don't know' is often better than hearsay and guesses. With coronavirus, we suddenly have a plethora of experts on pandemics and how diseases spread around the world, and much of the economic analysis is guesswork.

At first, the market reacted badly and fell, and one newsletter headlined 'Australia faces calamity'. Now, the Australian market is up over 2% since the day the virus was announced. Yesterday, AAP reported:

"The Nasdaq hit a record high on Tuesday and the S&P 500 posted its biggest one-day gain in about six months as fears of a heavy economic impact from the coronavirus outbreak waned after China's central bank intervened."

Ray Dalio, Chairman of Bridgewater, was the most honest in a LinkedIn post:

"First of all let me be clear that I’m a 'dumb sh*t' when it comes to pandemics because what I don’t know about them is more important than what I do know. I, and we at Bridgewater, don’t have a clue as to what extent this virus or 'pandemic' will spread, we don’t know where it will spread to, and we don’t know its economic or market impact."

We should not conflate the obvious importance of China, especially to Australia (Bridgewater provided the chart below) with the uncertain and unknown impact of coronavirus. Without underplaying the seriousness, it's too early to opine on the impact with authority.

The analysts highlighting the $36 billion wiped off the value of Australian shares in one day should reflect on the stories which caused similar falls in 2019, a wonderful year for the sharemarket:

  • "Stocks fell sharply on concerns over health of the global economy" (22/3/2019)
  • "Stocks plunge of trade fears" (7/5/2019)
  • "Dow tanks after bond market sends recession warning" (14/8/2019)
  • "US stocks dropped sharply after Apple warned it will badly miss sales forecast" (3/1/2019)

How many Apple shareholders missed the boom in Apple last year based on that warning?

While acknowledging it is early days, Morningstar has summarised what we know and outlined some Australian and global companies that might be affected.

Our articles start this week with two doyens of Australian publishing who have sold millions of books between them. Hugh Mackay reflects on our generous response to the bushfires by asking why the community does not always function this way.

Then in recognition of his recent 80th birthday, the sprightly and young-at-heart (who wouldn't be with 11 grandchildren!) Noel Whittaker provides a classic on staying invested for the long term, and his 20 commandments of wealth for retirees.

Since we published OK Boomer and its survey results, another 600 people have taken the poll, pushing responses to 2,400. The new comments are too heartfelt and honest to keep to ourselves.

Still on reader polls, our survey on selling fees paid to advisers on listed entities has attracted about 700 responses, and we provide the results and comments. As Survey Monkey went down just after publication, we will leave the survey open until Monday next week to give a chance to those who missed out [Note: This survey is now closed]. Then we will collate the results with our articles and send a package to the Treasurer's public consultation. Advisers should prepare for a ban on stamping fees.

Jeremy Cooper reports on National Seniors' research revealing most people are worried about running out of money in retirement. Better to focus on investing early, saving, educating yourself and then enjoying the fruits of your efforts.

Australians tend to invest in large cap, familiar local names, but Ned Bell shows there are gems to uncover in the global small to mid-cap space.

The Future Fund has released its latest asset allocations, and the changes over 2019 show how a large investor is protecting its capital. CEO David Neal has just resigned after 12 years to move to the industry fund's IFM Investors, perhaps a pointer to their future plans.

There is a growing 'flight-shaming' movement against air travel with implications for all infrastructure. The White Paper from First Sentier Investors looks at how to fly guilt-free.

Finally, to see how New York Life Insurance used a Super Bowl spot (cost over $8 million for 30 seconds) this week, watch this video. Do divine love and acts of generosity sell insurance?

 

Graham Hand, Managing Editor

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

 

1 Comments
 

Leave a Comment:

banner

Most viewed in recent weeks

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.

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?

5 charts every retiree must see…

Retirement can be daunting for Australians facing financial uncertainty. Understand your goals, longevity challenges, inflation impacts, market risks, and components of retirement income with these crucial charts.

Why super returns may be heading lower

Five mega trends point to risks of a more inflation prone and lower growth environment. This, along with rich market valuations, should constrain medium term superannuation returns to around 5% per annum.

The hidden property empire of Australia’s politicians

With rising home prices and falling affordability, political leaders preach reform. But asset disclosures show many are heavily invested in property - raising doubts about whose interests housing policy really protects.

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.

Latest Updates

Shares

Four best-ever charts for every adviser and investor

In any year since 1875, if you'd invested in the ASX, turned away and come back eight years later, your average return would be 120% with no negative periods. It's just one of the must-have stats that all investors should know.

Our experts on Jim Chalmers' super tax backdown

Labor has caved to pressure on key parts of the Division 296 tax, though also added some important nuances. Here are six experts’ views on the changes and what they mean for you.        

Superannuation

When you can withdraw your super

You can’t freely withdraw your super before 65. You need to meet certain legal conditions tied to your age, whether you’ve retired, or if you're using a transition to retirement option. 

Retirement

A national guide to concession entitlements

Navigating retirement concessions is unnecessarily complex. This outlines a new project to help older Australians find what they’re entitled to - quickly, clearly, and with less stress. 

Property

The psychology of REIT investing

Market shocks and rallies test every investor’s resolve. This explores practical strategies to stay grounded - resisting panic in downturns and FOMO in booms - while focusing on long-term returns. 

Fixed interest

Bonds are copping a bad rap

Bonds have had a tough few years and many investors are turning to other assets to diversify their portfolios. However, bonds can still play a valuable role as a source of income and risk mitigation.

Strategy

Is it time to fire the consultants?

The NSW government is cutting the use of consultants. Universities have also been criticized for relying on consultants as cover for restructuring plans. But are consultants really the problem they're made out to be?

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.