Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 386

Welcome to Firstlinks Edition 386

  •   3 December 2020
  • 1
  •      
  •   

Weekend market update: Both the S&P500 and NASDAQ posted gains of around 0.8% on Friday despite the record numbers of COVID-related deaths in the US and a weak jobs number. Over the week, the US was 1.7% higher to a new record, while Australia increased 0.5% on the back of surging iron ore prices. Rising commodity prices are pushing the $A higher, now about US$0.74 versus a March 2020 low of US$0.62.

***

Last week, I moved my home for the first time in 31 years. It was a once-in-a-lifetime opportunity to rationalise everything from books to documents to furniture, much of which we would have kept until death do us part without the move. It made me feel great sympathy for those people who are unwillingly forced to move accommodation regularly, such as renters subject to the short lease conditions in Australia. We had months to plan our move, but regularly relocating lives and schools at a month's notice must be draining. It's another dimension to the value of owning your own home which does not feature in the debate on early access to superannuation.

Most people read our articles but probably then don't go back to check the comments. Last week, our pieces on the Retirement Income Review drew over 50 comments showing the strong feelings on the Review's conclusions. This week, Jon Kalkman continues our study of the Final Report by asking whether the panel members really understand the consequences of their findings for retirees who aspire to more than the age pension.

Our feature article is investing guidance from Hamish Douglass from the sidelines of the recent Morningstar Individual Investor Conference, with three short videos and transcripts with Lex Hall. It's a fascinating time for investing with great optimism around vaccines, a clear Biden win, signs of strong growth in Australia and the question of whether 2021 will reward different styles than during the pandemic.

The latest Bank of America Global Fund Manager Survey (FMS) suggests professionals are positioning for change. As the chart below shows, the big moves over the first half of November 2020 were into small caps over large caps, into emerging markets, more value than growth and less defensive in cash, bonds and staples. Energy was back in favour. These moves are counter to the best positioning in 2020. The FMS growth outlook is strong, with managers rotating into previously hard-hit companies and sectors.

Also this week, we dive into the new numbers on the cost of running an SMSF versus fees on retail or industry funds. Turns out the break even is around $250,000 based on administration costs rather than investments.

Still on SMSFs, David Macri suggests that while trustees might handle their own cash and domestic equities, there are particular types of investments worth leaving to the professionals for a better outcome.

Building on this theme, the White Paper this week from BetaShares shows three global tactical trades that can be executed using ETFs listed in Australia.

When we hear an investing term such as 'growth' or 'momentum' or 'quality', it's tempting to put all funds into one bucket and assume they will perfrom in a similar way. Zunjar Sanzgiri takes a look at a popular segment of the Exchange Traded Fund (ETF) market and shows how funds with the same name differ markedly.

Then Aaron Minney makes a great point about retirement planning, showing why using average life expectancy produces misleading outcomes. All retirees and their financial planners need to consider this piece.

Finally, David Walsh delves deeper into the numbers which are supposed to show that local and global markets are seeing a big wave of Zombie companies propped up by supportive government policies.

Finally, with Australian states reluctantly opening their borders as community-based transmission is negligible, no such caution for Thanksgiving Day last week in the United States. Flightradar24 monitors jet movements, and millions of Americans honoured the tradition of celebrating the harvest. While Australia can afford to take its time watching the encouraging test results, the vaccine cannot come too quickly in a country with 280,000 deaths and 14 million cases. The US recorded its worst day for COVID deaths on record last week.

 

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

Latest LIC Quarterly Report from Bell Potter

Plus updates and announcements on the Sponsor Noticeboard on our website

 

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Latest Updates

Investment strategies

Trump's US dollar assault is fuelling CBA's rise

Australian-based investors have been perplexed by the steep rise in CBA's share price But it's becoming clear that US funds are buying into our largest bank as a hedge against potential QE and further falls in the US dollar.

Investment strategies

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Property

Soaring house prices may be locking people into marriages

Soaring house prices are deepening Australia's cost of living crisis - and possibly distorting marriage decisions. New research links unexpected price changes to whether couples separate or silently struggle together.

Investment strategies

Google is facing 'the innovator's dilemma'

Artificial intelligence is forcing Google to rethink search - and its future. As usage shifts and rivals close in, will it adapt in time, or become a cautionary tale of disrupted disruptors?

Investment strategies

Study supports what many suspected about passive investing

The surge in passive investing doesn’t just mirror the market—it shapes it, often amplifying the rise of the largest firms and creating new risks and opportunities. For investors, understanding these effects is essential.

Property

Should we dump stamp duties for land taxes?

Economists have long flagged the idea of swapping property taxes for land taxes for fairness and equity reasons. This looks at why what seems fairer may not deliver the outcomes that we expect.

Investing

Being human means being a bad investor

Many of the behaviours that have made humans such a successful species also make it difficult for us to be good, long-term investors. The key to better decision making is to understand what makes us human and adapt.

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.