Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 380

Welcome to Firstlinks Edition 380

  •   22 October 2020
  •      
  •   

Weekend market update

The US market delivered a solid performance on Friday in the wake of a more civilised Presidential debate, with the S&P500 and NASDAQ both rising 0.4%. However, over the week, the broad index was down 0.5% as stimulus talks stalled and new virus cases grew around the world, especially in Europe. Locally, the S&P/ASX200 was flat both on Friday and over the week. The opening up of Victoria shows Australia is in better control of the virus than most other countries, especially as we head into summer while the US and Europe face chillier times.   

***

When I was responsible for alliances at Colonial First State, in 2007 we introduced Al Gore's Generation Investment Management to the Australian retail market (and it has performed well since under the guidance of Co-Chief Investment Officer, Mark Ferguson, son of Sir Alex). On a couple of occasions, I hosted the 45th Vice President of the US to dinners with investors and advisers, and he was always engaging and informative. His care for the environment was genuine, and the world would have become a different place if the US Supreme Court had ruled in his favour to become President in December 2000 instead of George W Bush.

One time, I asked Gore about political funding and its implications. He said when he first went into politics, he raised US$70,000 of his own money and from friends and family, but if he wanted to run for the same position again, he would need at least US$100 million. And that was 13 years ago.

To an Australian, the numbers spent on political advertising in the US are unbelievable. Joe Biden will spend twice as much as Donald Trump by election day, the combined total reaching an estimated US$2.8 billion just on TV advertising. Facebook produces an ad tracker which shows in Texas alone, each spends around US$200,000 a week on the social media site. 

There are 12,000 registered lobbyists in Washington, and promises of money and favours are traded every day. That's the democratic system. 

Our local news has been dominated by shady deals with property developers, cash for visas, sports rorts, overpriced airport land, questionable defence contracts and former ministers taking outside jobs relating to their prior portfolios. But we are babes in the wood compared with the influence billions of dollars buys in the US. Al Gore told me he would never stand for office again.

With non-compulsory voting in the US, the challenge is to convince people to make the effort, although this time, there are already massive pre-polls and data showing more people than ever care. This time it really matters.

Back to all things investing and our stellar line up ...

Kate Howitt has been voted one of the leading female fund managers in the world, and she reveals the stocks she likes, unique insights into how the investing world has changed in 2020, plus a great tip for inexperienced investors.

In this edited extract, Hamish Douglass answers client questions posed by Frank Casarotti, including how Magellan still plans to deliver on its 9% aspiration over time, and why unlimited government debt is akin to believing in the tooth fairy.

Roger Montgomery rounds out this fund manager trio with a study of what Warren Buffett is probably thinking about technology, and the search for sustainable earnings over a decade, not near-term popularity.

The leading futurist Phil Ruthven gives some big picture analysis and charts on Australia's debt in a global context, and he asks if we can afford it and what are the future consequences.

Continuing this bumper edition, Lex Hall delves into the Morningstar stock screener to find 18 Australian companies rated cheap relative to their estimated value. A great selection for a watch list.

Then a highly-informative article by actuary Tony Dillon, who answers a question many people ask: why don't more fundies use options to protect the downside on their share portfolios? It's easy enough in theory but what does it cost?

Finally, Grant Berry says that listed property has recovered better than expected and many sectors offer the yields that have become increasingly scarce elsewhere.

This week's White Paper from Capital Group is a guide to market recoveries, and the benefits of staying invested for the long term, including three mistakes that investors should avoid.

 

Graham Hand, Managing Editor

 

Latest updates

PDF version of Firstlinks Newsletter

ASX Listed Bond and Hybrid rate sheet from NAB/nabtrade

Indicative Listed Investment Company (LIC) NTA Report from Bell Potter

Plus updates and announcements on the Sponsor Noticeboard on our website

 


 

Leave a Comment:

banner

Most viewed in recent weeks

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Welcome to Firstlinks Edition 627 with weekend update

This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.

  • 4 September 2025

5 charts every retiree must see…

Retirement can be daunting for Australians facing financial uncertainty. Understand your goals, longevity challenges, inflation impacts, market risks, and components of retirement income with these crucial charts.

Why super returns may be heading lower

Five mega trends point to risks of a more inflation prone and lower growth environment. This, along with rich market valuations, should constrain medium term superannuation returns to around 5% per annum.

The hidden property empire of Australia’s politicians

With rising home prices and falling affordability, political leaders preach reform. But asset disclosures show many are heavily invested in property - raising doubts about whose interests housing policy really protects.

Latest Updates

Investment strategies

Why I dislike dividend stocks

If you need income then buying dividend stocks makes perfect sense. But if you don’t then it makes little sense because it’s likely to limit building real wealth. Here’s what you should do instead.

Superannuation

Meg on SMSFs: Indexation of Division 296 tax isn't enough

Labor is reviewing the $3 million super tax's most contentious aspects: lack of indexation and the tax on unrealised gains. Those fighting for change shouldn’t just settle for indexation of the threshold.

Shares

Will ASX dividends rise over the next 12 months?

Market forecasts for ASX dividend yields are at a 30-year low amid fears about the economy and the capacity for banks and resource companies to pay higher dividends. This pessimism seems overdone.

Shares

Expensive market valuations may make sense

World share markets seem toppy at first glance, though digging deeper reveals important nuances. While the top 2% of stocks are pricey, they're also growing faster, and the remaining 98% are inexpensive versus history.

Fixed interest

The end of the strong US dollar cycle

The US dollar’s overvaluation, weaker fundamentals, and crowded positioning point to further downside. Diversifying into non-US equities and emerging market debt may offer opportunities for global investors.

Investment strategies

Today’s case for floating rate notes

Market volatility and uncertainty in 2025 prompt the need for a diversified portfolio. Floating Rate Notes offer stability, income, and protection against interest rate risks, making them a valuable investment option.

Strategy

Breaking down recent footy finals by the numbers

In a first, 2025 saw AFL and NRL minor premiers both go out in straight sets. AFL data suggests the pre-finals bye is weakening the stranglehold of top-4 sides more than ever before.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.