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Edition: 354

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What are the options for a pandemic exit strategy?

The risk of easing restrictions early is still large but it could be managed progressively, while the risk of staying out longer will be crippling for the economy. Here's a summary of the options.

What do 11 stock market crises over 148 years tell us?

There have been 11 occasions in the 148 years between 1871 and 2019 when US stocks destroyed at least 25% of value for investors. What has been the best strategy to recover the losses?

A band-aid on a bullet wound

As hopes of a V-shaped recovery diminish, so will the revenues of many highly-geared companies. Client redemptions and downgrades will force selling at distressed prices beyond the Fed's capacity.

The vital 'rule of thumb' influencing the market

A key market heuristic during times of crisis is the second derivative. This is simply the rate of change or the acceleration or deceleration of whatever is causing the crisis.

Bear markets are good for portfolio makeovers, not only bargains

The tax cost of a ‘portfolio makeover’ from moving equities to a more efficient structure may now be minor compared with the benefits. The market fall is not just an opportunity to find bargains.

Are we again crying wolf on inflation risk in pandemic response?

Are analysts who repeatedly issue warnings that do not come true crying wolf about an imaginary risk of inflation? The problem is governments may become addicted to imprudent deficit spending. 

Take a total return focus during COVID-19

Rather than tying spending only to the income generated by a portfolio, a total-return approach encourages the use of capital returns when necessary to meet defined goals.

Is it fair that the wealthier get the most super benefits?

A reader asks about the inequitable distribution of the tax advantages of super, with most taxation benefits going to those with the highest incomes. We asked David Knox of Mercer to respond.

Magellan versus Platinum: which offers a less bumpy ride?

Magellan has attracted massive inflows in the last five years, while Platinum has struggled. The disparity in both track records can be explained by their varying investment approaches.

Welcome to Firstlinks Edition 354

  • 22 April 2020
  • 4

The impact of central bank activity on stock and bond markets is so pervasive that 'don't fight the Fed' has become a cliché. In fact, clichés are thriving in the coronavirus pandemic. We hear 'the cure is worse than the disease', events are 'unprecedented' and 'black swans', hotels and ships are 'Petri dishes', while 'we're all in this together' but it's 'the worst since the Great Depression' before we 'come out on the other side'. And yes, yes, yes, we know 'when the tide goes out, we can see who's been swimming naked'.

Most viewed in recent weeks

Unexpected results in our retirement income survey

Who knew? With some surprise results, the Government is on unexpected firm ground in asking people to draw on all their assets in retirement, although the comments show what feisty and informed readers we have.

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

Three all-time best tables for every adviser and investor

It's a remarkable statistic. In any year since 1875, if you had invested in the Australian stock index, turned away and come back eight years later, your average return would be 120% with no negative periods.

The looming excess of housing and why prices will fall

Never stand between Australian households and an uncapped government programme with $3 billion in ‘free money’ to build or renovate their homes. But excess supply is coming with an absence of net migration.

Five stocks that have worked well in our portfolios

Picking macro trends is difficult. What may seem logical and compelling one minute may completely change a few months later. There are better rewards from focussing on identifying the best companies at good prices.

Six COVID opportunist stocks prospering in adversity

Some high-quality companies have emerged even stronger since the onset of COVID and are well placed for outperformance. We call these the ‘COVID Opportunists’ as they are now dominating their specific sectors.

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