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Edition: 358

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Welcome to Firstlinks Edition 358

  • 20 May 2020

One of the many victims of COVID-19 is Australia as a private sector, market-based economy. It's become a public-subsidised economy. Most workers are on some type of government support, and the downturn is disguised in the official numbers. Last week's unemployment rate of 6.2% is fiction, as most workers are either unemployed, paid by the government or they have given up looking for work. How do we climb out of the valley?

Baseline outlook for economic recovery is too optimistic

We cannot throw our hands up in the air and say 'this time around, it's simply too hard'. Having no macro view is unhelpful, but many of the baseline scenarios are overly optimistic, says the former CEO of Westpac and now Chairman of Chi-X Australia.

Will our government embrace these three reforms?

COVID-19 is an opportunity for a crucial policy reset, but what does that really mean? Business is hoping for three big reforms, but there are massive barriers to be overcome.

8 reasons business has little to learn from 'The Last Dance'

Everyone seems to be watching The Last Dance, a fascinating sports documentary about the pursuit of excellence by one of the greatest athletes of all time. Let's not stretch the business analogy too far.

Do long-term investors need to care about the ‘next big thing’?

When we look back five years from now, which companies will we regret not having bought at today’s prices? The next opportunities come from focusing on the long term, not the next few months.

Not all non-residential real estate performs the same

Retail assets, particularly those focused on discretionary shopping, will continue to underperform and industrial and logistics assets will be the winners for the foreseeable future.

The uncertainties of using debt in a time of crisis

The ability of countries to support their economies today turns on fiscal practices set well before this crisis. Increasing levels of debt escalate overall risk, and tie our hands in the future.

Do you qualify for this help in the crisis?

It will surprise many that benefits worth over $8,700 could be available for a couple with a super balance over $4 million. Check if you are eligible for the Commonwealth Seniors Health Card.

What SMSF trustees need to know about benefit payments now

The government has announced initiatives to help people use their superannuation in response to the crisis, but for early access and drawdown changes, there are important rules to follow.

On the pandemic front line: Fisher & Paykel Healthcare

Unlike the share prices of some companies which have held up due to their defensive characteristics, Fisher & Paykel is playing an active role in mitigating the worst effects of the crisis.

Four huge categories of change after the pandemic

The deteriorating mood will bring changes that will have profound economic, financial, social and political changes that can be grouped into new, accelerated, busted and possible trends.

Which market comes out first in a recovery?

Downside risks remain and we expect another leg down, but active managers should take advantage of market dislocations. In the current context, humility and risk management are key.

Most viewed in recent weeks

11 lessons from my lousy $50K profit on Afterpay

Afterpay listed at $1 in 2016 and traded recently at $70. How should an investor treat a small holding in a 70-bagger when each new level defies the experts? Should true believers let the profits run?

How much bigger can the virus bubble get?

Stocks have rallied hard creating a virus bubble, but will this run for years or collapse in a matter of months? The market is giving a second chance to leave so head for the exit before there's a rush.

Which companies will do well in the turmoil of 2020?

While the shutting of Australia’s borders to international travellers and quarantine measures is damaging to certain sectors of the economy, it is not uniformly negative for all companies.

Share trading is the new addiction

The ability to buy and sell cheaply and quickly in small parcels is both the biggest drawback and benefit of shares. But it encourages people who should not go near the market to use it as a casino.

What is happening with SMSFs? Part 1

Taking a realistic view of the median ‘operating expense’ of an SMSF shows they cost less to run than previously claimed. Look at this granular breakdown and see how the costs of running your SMSF compare.

Why are we convinced 'this time it's different'?

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?

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