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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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Rob Arnott is a leading researcher, fund manager and academic often quoted in US media. We chatted at a moment in time when President Trump must make some critical calls on coronavirus.
Quantum computers have a theoretical ability to calculate millions of possibilities in seconds, yet it may take time before we see a breakthrough in the practical applications of sub-atomic computing.
Prolonging a recovery with stimulus could lead to a worse slump later. Even today, policymakers are haunted by actions taken in 1937 which led to a loss of production and jobs and a falling GDP.
Stocks are vulnerable if interest rates rise much faster than expected on inflation concerns. What is the probability of this heightened risk and what are the consequences for portfolios?
Even the experts concede that the more you know, the less you can be sure. Donald Trump is playing a game of brinkmanship with the trade wars, and it could end badly. Or not.
Australian credit markets have had a good run, and any investor tempted to exit the sector should consider whether a move now is too early in the cycle. A period of range-bound stability is the more likely outcome.
President-elect Donald Trump divides opinion, and there is no way of knowing whether the rhetoric that won him the top job will translate into action. Here's a quick look at some implications.
Many people have been quoting the Australian shares return for FY2015 as 2.4%, but that is only the price index. The accumulation index is up a healthy 7.1%. All asset classes generated returns well above inflation and cash rates.
It's too easy to think the future will be a simple extrapolation of the recent past. Just because inflation has been well under control in recent years doesn't mean we should ignore the inflation risks.
Unemployment and inflation seem to be heading in different directions in Australia and the United States, but the outcomes for interest rates and equity markets might be the same.
Secular stagnation can result from a sustained lack of demand or low growth in productivity, and can create low or negative investment returns. Could this happen in Australia?
A positive view on US growth but some concerns around possible inflation effects and the unwinding of QE. Growth may give a tailwind but it is rarely the most important factor determining market returns.
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.