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Monday, 10 August 2020
Recently trending A hard dose reality check on vaccinesAfter 30 years of investing, I prefer to skip this partyAustralian house prices: Part 2, the bigger picture How we have invested during COVID-19How to handle the riskiest company results in history
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Going back to June 2019, investors would have questioned the logic of diversifying away from outperforming growth assets. But when markets feel at their best, it is paramount to keep a perspective on long-term goals.
As uncertainty intensifies around geopolitics and markets, gold has rallied strongly in 2020. While most investors think of gold for price growth, does it deliver defensive features to a diversified portfolio?
An investment in gold without hedging the currency risk of the USD price can deliver portfolio diversification and protection, with the AUD price often rising when equity markets are falling.
Investing is a field where experience matters, but we all operate with a set of beliefs. Staying on top of market research gives useful lessons for investors and challenges common assumptions.
Although equities are widely-held by Australian investors, there is a strong domestic bias that gives many portfolios high sector concentrations. Better diversification requires a global focus.
Although SMSFs are the largest segment of the $3 trillion super industry, the data on asset allocation is poor. There are signs the ATO is finally looking to fix its data collection.
Investors should construct an ‘optimal portfolio’ that broadly falls on the efficient frontier. A ‘high growth’ balanced portfolio can deliver higher returns with lower risk than equities alone.
Hybrids deliver returns comparable with equities over the long term with less volatility, which makes the risk-adjusted return and lack of correlation to equities an attractive characteristic in a diversified portfolio.
To avoid retreating from making investment decisions during uncertainty, investors are compelled to rely on 'rules of thumb' to guide them in decision-making. Here are many of the more popular commonly-used rules.
An efficient diversified portfolio might include unfamiliar assets with short-term volatility. It's important to focus on a comfort level to attain the long-term benefits of diversification in a portfolio.
The active v passive debate has deflected attention from a more important issue, a focus on managing to client goals. Plus active management has suffered relative to passive by the central bank-driven uplift of all assets.
Investors shouldn't automatically assume the inclusion of bonds in a portfolio provides diversity against their equity exposure, as correlations can change in volatile markets.
With 160 programmes underway and billions of dollars spent on COVID-19 vaccines, investors are drawn to optimistic news. However, the company that has developed most new vaccines has a sober view.
Eventually, prices become so extreme they bear no relationship to reality, and a bubble forms. I believe we are there today, not for all stocks but for many in the technology space.
There is good reason to believe the negatives will continue to outweigh the positives over the next 12 to 18 months. There is more concern about house prices than the short-term indicators suggest.
With signs that the economic recession will not be as deep as first feared, many companies will emerge strongly with robust business models. Here are the sectors with the best opportunities.
It is better to miss a results bounce and buy after the company has delivered than it is to step on a landmine. With such uncertainty, avoid FOMO by following these result season investing tips.
Three key indicators are useful for predicting the short-term outlook for house prices, although tighter lockdowns make the outlook gloomier. There is enough doubt to create cause for concern.