At a time when we are overwhelmed with information, getting back to basics is crucial. This desire to focus on the fundamentals has guided the selection of my favourite five Cuffelinks articles from last year.
Whenever I give a seminar, many of the questions are from people who want to know where the stock market is going, where interest rates are going, where commodity prices are going and where they should invest next. My reply is always that if they focus on things they can control, they won't need to be unduly worried about things they can't.
This is why the article on Howard Marks is important. It goes right back to basic principles, explains the dangers of forecasting, and how many of them are wrong.
This leads naturally to the next article by Don Stammer. Just before the 2016 presidential elections, I received many emails and calls from people telling me proudly they had cashed in their portfolio "in case Trump got elected". And we know what a bad decision that turned out to be.
In my 20 Commandments of Wealth for Retirees (also available as a PDF by free download from my website) I point out that one of the worst enemies of the investor is the media – it only focuses on bad and pessimistic news.
The Labor attack on family trusts showed a deplorable lack of knowledge about how they work. It also had the potential to scare people away from what has long been one of the most attractive and effective entities for minimising tax legally, and protecting assets. Therefore, Sam Wylie’s article was timely inasmuch as it explained in a simple way how trusts work and the benefits they could bring to investors.
As I have said many times, the main enemy of an investor is not the markets or taxation, it is simply ignorance. Having reached the ripe old age of 78, my focus has moved from acquiring assets for myself to spending my money in a way that enables me to leave a legacy. And all the research shows that giving money to worthy causes produces enormous personal happiness and satisfaction.
After I read the article by Antonia Ruffell, I phoned Chris Cuffe for advice on what my next step should be. This led me to a meeting with Antonia, and subsequently to starting my own endowment fund. I am delighted with the process.
We are now 30 years from the 1987 crash. For many of us old grey hairs it is still memorable, but most Australians who have reached investing age know nothing about it. Ashley Owen has been a friend of mine for many years, and is one of the most knowledgeable people about markets I have ever met. This article is an outstanding contribution to the pool of knowledge that any successful investor needs to have.
Noel Whittaker, Guest Editor
Noel Whittaker is one of Australia's foremost authorities on personal finance and a best-selling author of many books including Making Money Made Simple. See www.noelwhittaker.com.au.
This week's White Paper from Legg Mason's Western Asset Australia looks at where market returns may be generated in 2018, including a great chart of five-year correlations between different asset classes in Australia.
Edition 234 | 12 Jan 2018 | Editorial | Newsletter