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Wednesday, 8 July 2020
Recently trending How much bigger can the virus bubble get?Share trading is the new addictionWhat is happening with SMSFs? Part 1Welcome to Firstlinks Edition 362New ways for listed funds to fix their price discounts
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Despite signs of optimism, market valuations are stretched and recovery is fuelled by government support. Some companies are doing well but stimulus cannot continue to prop up consumers for too long.
As much as value investors with spare cash want to jump on undervalued companies, it's probably not the time to buy the dip in the market just yet as the US braces for coronavirus's full impact.
The strong market has challenged value investors who want to buy at lower prices, but there are signs 2020 will continue a 'sweet spot' of profit growth, low inflation and central bank liquidity support.
A shock to a portfolio at the wrong time can compromise a retirement plan where cash must be withdrawn each year. There are funds which attempt to trade some of the upside to reduce the downside.
Markets are overlooking the obvious risks as traders pass the parcel to the next buyer. Even central bankers believe: “There is something vaguely troubling when the unthinkable becomes routine.”
Let's face it. Prices for many listed and unlisted companies have reached insane levels. Many of Australia's most reputable and successful fund managers are bewildered by the current market, and something's got to give.
Markets can swing quickly from optimism to pessimism, and while there are more positives now than in the bleak early days in March, the market is ignoring many negatives. Risk is not rewarded at these levels.
Investors tend to overstate the impact on investments when something significant happens and they assume the future will be different. COVID-19 has been dramatic, but is it really that unusual?
APRA's heatmap has profound implications as it shows which super funds are underperforming in a period. But when good markets are compared with poor markets, one in five of funds changes its assessment.
Many people were financially unprepared for a pandemic, but it is women who are suffering most because they earn less, have interrupted careers and have less risk-taking capacity.
The latest SMSF data shows retirees favour listed shares and cash to maintain liquidity. SMSFs continue to grow, and the new super rules led to changes in contributions, payments and lump sums.
A new survey of over 1,000 people near or in retirement found three in four are not confident how long their money will last. Only 18% felt their money was safe during a strong economic downturn.
Awareness of common misunderstandings in relation to the payment of death benefit pensions can assist in estate planning matters. Given the large amounts involved, seeking professional advice helps.