Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

21 May 2024

Home / 343

Welcome to Firstlinks Edition 343

  •   6 February 2020
  • 1
  •      
  •   

Please note that some readers who should be linked to Edition 344 have been sent to this Edition 343. The correct link to the latest edition is here.

Apologies for the inconvenience.

 

This is Edition 343.

There are three words that most experts are unwilling to say. In complex circumstances with many unknowns, 'I don't know' is often better than hearsay and guesses. With coronavirus, we suddenly have a plethora of experts on pandemics and how diseases spread around the world, and much of the economic analysis is guesswork.

At first, the market reacted badly and fell, and one newsletter headlined 'Australia faces calamity'. Now, the Australian market is up over 2% since the day the virus was announced. Yesterday, AAP reported:

"The Nasdaq hit a record high on Tuesday and the S&P 500 posted its biggest one-day gain in about six months as fears of a heavy economic impact from the coronavirus outbreak waned after China's central bank intervened."

Ray Dalio, Chairman of Bridgewater, was the most honest in a LinkedIn post:

"First of all let me be clear that I’m a 'dumb sh*t' when it comes to pandemics because what I don’t know about them is more important than what I do know. I, and we at Bridgewater, don’t have a clue as to what extent this virus or 'pandemic' will spread, we don’t know where it will spread to, and we don’t know its economic or market impact."

We should not conflate the obvious importance of China, especially to Australia (Bridgewater provided the chart below) with the uncertain and unknown impact of coronavirus. Without underplaying the seriousness, it's too early to opine on the impact with authority.

The analysts highlighting the $36 billion wiped off the value of Australian shares in one day should reflect on the stories which caused similar falls in 2019, a wonderful year for the sharemarket:

  • "Stocks fell sharply on concerns over health of the global economy" (22/3/2019)
  • "Stocks plunge of trade fears" (7/5/2019)
  • "Dow tanks after bond market sends recession warning" (14/8/2019)
  • "US stocks dropped sharply after Apple warned it will badly miss sales forecast" (3/1/2019)

How many Apple shareholders missed the boom in Apple last year based on that warning?

While acknowledging it is early days, Morningstar has summarised what we know and outlined some Australian and global companies that might be affected.

Our articles start this week with two doyens of Australian publishing who have sold millions of books between them. Hugh Mackay reflects on our generous response to the bushfires by asking why the community does not always function this way.

Then in recognition of his recent 80th birthday, the sprightly and young-at-heart (who wouldn't be with 11 grandchildren!) Noel Whittaker provides a classic on staying invested for the long term, and his 20 commandments of wealth for retirees.

Since we published OK Boomer and its survey results, another 600 people have taken the poll, pushing responses to 2,400. The new comments are too heartfelt and honest to keep to ourselves.

Still on reader polls, our survey on selling fees paid to advisers on listed entities has attracted about 700 responses, and we provide the results and comments. As Survey Monkey went down just after publication, we will leave the survey open until Monday next week to give a chance to those who missed out [Note: This survey is now closed]. Then we will collate the results with our articles and send a package to the Treasurer's public consultation. Advisers should prepare for a ban on stamping fees.

Jeremy Cooper reports on National Seniors' research revealing most people are worried about running out of money in retirement. Better to focus on investing early, saving, educating yourself and then enjoying the fruits of your efforts.

Australians tend to invest in large cap, familiar local names, but Ned Bell shows there are gems to uncover in the global small to mid-cap space.

The Future Fund has released its latest asset allocations, and the changes over 2019 show how a large investor is protecting its capital. CEO David Neal has just resigned after 12 years to move to the industry fund's IFM Investors, perhaps a pointer to their future plans.

There is a growing 'flight-shaming' movement against air travel with implications for all infrastructure. The White Paper from First Sentier Investors looks at how to fly guilt-free.

Finally, to see how New York Life Insurance used a Super Bowl spot (cost over $8 million for 30 seconds) this week, watch this video. Do divine love and acts of generosity sell insurance?

 

Graham Hand, Managing Editor

For a PDF version of this week’s newsletter articles, click here.

 

1 Comments
John K
February 08, 2020

Regarding the paper on 'How to fly guilt-free'.

Swedes have the luxury of being able to travel with ease and comfort to and through a large number of countries in Europe and beyond by train. This makes it easy to smugly wag the finger at those who are able to do likewise only by air travel.

Nevertheless, the appeal to self-regulation and to self-abnegation, by way of voluntary carbon offsets and the like, to attack the problem of carbon emissions from aviation (“How to fly guilt-free” 5 Feb 2020) is an unacceptably deficient response to the environmental damage caused by aviation.

Indeed, such a dilettantish approach to the relentless power and market appeal of price-competitive consumerism in an expanding global middle class is likely only to compound the damage caused by aviation emissions by delaying and prevaricating on the need for serious non-voluntary environmental pricing and other regulatory measures – just as a laissez-faire appeal to self-regulation in the financial and construction sectors has compounded the harm from bad behaviour and delayed the introduction of regulation with teeth in those industries.

Moreover, the need to address environmental harm is much more serious and urgent than the need to deal with bad behaviour in the financial sector. Unlike a fee-for-no-service in finance, environmental harm cannot be reversed by a simple contra entry.

 

Leave a Comment:
Firstlinks is sponsored by:
banner

Most viewed in recent weeks

Are term deposits attractive right now?

If you’re like me, you may have put money into term deposits over the past year and it’s time to decide whether to roll them over or look elsewhere. Here are the pros and cons of cash versus other assets right now.

Where Baby Boomer wealth will end up

By 2028, all Baby Boomers will be eligible for retirement and the Baby Boomer bubble will have all but deflated. Where will this generation's money end up, and what are the implications for the wealth management industry?

Uncomfortable truths: The real cost of living in retirement

How useful are the retirement savings and spending targets put out by various groups such as ASFA? Not very, and it's reducing the ability of ordinary retirees to fully understand their retirement income options.

How retiree spending plummets as we age

There's been little debate on how spending changes as people progress through retirement. Yet, it's a critical issue as it can have a significant impact on the level of savings required at the point of retirement.

Is Australia ready for its population growth over the next decade?

Australia will have 3.7 million more people in a decade's time, though the growth won't be evenly distributed. Over 85s will see the fastest growth, while the number of younger people will barely rise. 

20 US stocks to buy and hold forever

Recently, I compiled a list of ASX stocks that you could buy and hold forever. Here’s a follow-up list of US stocks that you could own indefinitely, including well-known names like Microsoft, as well as lesser-known gems.

Latest Updates

Property

Financial pathways to buying a home require planning

In the six months of my battle with brain cancer, one part of financial markets has fascinated me, and it’s probably not what you think. What's led the pages of my reading is real estate, especially residential.

Superannuation

Meg on SMSFs: $3 million super tax coming whether we’re ready or not

A Senate Committee reported back last week with a majority recommendation to pass the $3 million super tax unaltered. It seems that the tax is coming, and this is what those affected should be doing now to prepare for it.

Economy

Household spending falls as higher costs bite

Shoppers are cutting back spending at supermarkets, gyms, and bakeries to cope with soaring insurance and education costs as household spending continues to slump. Renters especially are feeling the pinch.

Shares

Who gets the gold stars this bank reporting season?

The recent bank reporting season saw all the major banks report solid results, large share buybacks, and very low bad debts. Here's a look at the main themes from the results, and the winners and losers.

Shares

Small caps v large caps: Don’t be penny wise but pound foolish

What is the catalyst for smalls caps to start outperforming their larger counterparts? Cheap relative valuation is bullish though it isn't a catalyst, so what else could drive a long-awaited turnaround?

Financial planning

Estate planning made simple, Part II

'Putting your affairs in order' is a term that is commonly used when people are approaching the end of their life. It is not as easy as it sounds, though it should not overwhelming, or consume all of your spare time.

Financial planning

Where Baby Boomer wealth will end up

By 2028, all Baby Boomers will be eligible for retirement and the Baby Boomer bubble will have all but deflated. Where will this generation's money end up, and what are the implications for the wealth management industry?

Sponsors

Alliances

Site Map

About Firstlinks

© 2024 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.