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Monday, 25 May 2020
Recently trending Buffett's meeting takeaway: extreme cautionWelcome to Firstlinks Edition 356The vibe of future returns: tell ‘em they’re dreamin’Baseline outlook for economic recovery is too optimistic Retiree spending patterns differ from most expectations
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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.
Reductions in loan repayments, either deferrals or failing to opt out of lower payments, seem like a good idea. But they are expensive and should only be adopted if the borrower needs the money.
It might be a 'black swan' event, but the market is down only 15% since its peak. Looking back at an article written in 2008 reveals the uncertainty at the time was similar to the unknowns now.
Free spending by governments risks unsustainably higher debt levels, as deficits matter and must be paid for. Here are four steps investors should consider as previous techniques may not work.
As we slowly emerge from the pandemic, there is a small window where everyone is on the same team, fighting a war against a common, invisible enemy. It's an opportunity to make some big decisions.
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.
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 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.
As companies 'do their bit' to fight coronavirus, company executives and boards have amended stakeholder priorities. The rules of investing have changed, but it's only appropriate for the short term.
Bill Gates warned the world in 2015 that we were not ready for the next inevitable pandemic, and we ignored him. The Washington Post has provided free access to his updated views.
A simple check of the mathematics explains why social distancing is so important, and in the absence of a treatment or vaccine, the only way to stop COVID-19 becoming rampant.
All crises are inherently different, but investor reaction to them is remarkably consistent. There's no evidence to suggest this has changed, which means there are importnt lessons from history.
Warren Buffett's annual meeting of Berkshire Hathaway showed he has not been 'investing while others are fearful' during the crisis. lt's a reminder to take caution and preserve cash.
Few investors are as influential as Warren Buffett, although for the moment, the market is ignoring his caution. The annual meeting of Berkshire Hathaway revealed Buffett did not use the heavy market falls in February to buy shares. Rather than 'buy when others are fearful', he was a net seller of US$6 billion for the quarter, disposing of all airline shares. Berkshire is sitting on US$137 billion in cash, suggesting he expects better buying opportunities to come.
It's the vibe, but not much else. Super balance calculations default to earnings rates of 7.5%, but that's in the past. Global experts suggest financial plans are now dreaming at this level.
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.
A study of actual spending habits shows retirees have a faster-than-expected drop-off in spending in later years, casting doubts on financial plans that assume increasing expenditure over time.
There is a remarkable concentration similarity between the Australian and US stock markets that has delivered poor results for Australians and great results for Americans (and global investors). As the share prices of five Australian banks have tanked, the prices of five US technology companies have surged. Each group now represents 20% of their respective indexes, but the journey has been a disaster for many Australians.