Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

ViewPoint: Wash, Rinse, Repeat

  •   VanEck
  •   18 January 2024
  •      
  •   

In summary:

  • 2023 was simple (or not so simple), stay invested but be selective.
  • Fixed income investors eked out a positive as long-end of the curves slumped. Rate gyrations and inflation are still keeping investors up at night.
  • Q4 was all the rage and double digit returns for most risk-on asset classes in 2023 with US equities returning positive 26%. At the bottom of the equity complex was China A shares down circa 12%.
  • We continue to emphasise that in 2024 investors should be selective. Although markets may be pricing rate cuts we think it is all too premature.
  • So where is the future risk? We continue to maintain that the risk is in leverage, insufficient cash flow/assets relative to liabilities in the likes of commercial real estate and other private assets. Wholesale investors will likely bear the brunt of this.
  • EPS forecasts barely factor a recession, earnings yields below Treasury Bonds. Financial conditions are still loose.
  • Where art thou recession? The clouds of gloom have not yet arrived but could towards the back end of 2024.
  • A reasonable outcome may be a mild recession but the macro resilience will continue to challenge fixed income investors and leveraged assets.
  • RBA unlikely to cut rates and more likely to raise. Market overestimating the speed of cuts. Australian consumers to tighten the purses.
  • What do we like in 2024?
  • Exogenous risks remain elevated and even more pronounced. Portfolio hedging is vital. Emerging markets, Gold and gold miners (Gold to break all-time-high of US$2,135), quality and quality international small companies, avoid concentrated bets.
  • Beaten up complexes such as REITs and small caps may present opportunities but importantly, be selective.

Download the full paper


 

Leave a Comment:


banner

Most viewed in recent weeks

Vale Graham Hand

It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.

The nuts and bolts of family trusts

There are well over 800,000 family trusts in Australia, controlling more than $3 trillion of assets. Here's a guide on whether a family trust may have a place in your individual investment strategy.

Welcome to Firstlinks Edition 583 with weekend update

Investing guru Howard Marks says he had two epiphanies while visiting Australia recently: the two major asset classes aren’t what you think they are, and one key decision matters above all else when building portfolios.

  • 24 October 2024

Warren Buffett is preparing for a bear market. Should you?

Berkshire Hathaway’s third quarter earnings update reveals Buffett is selling stocks and building record cash reserves. Here’s a look at his track record in calling market tops and whether you should follow his lead and dial down risk.

Preserving wealth through generations is hard

How have so many wealthy families through history managed to squander their fortunes? This looks at the lessons from these families and offers several solutions to making and keeping money over the long-term.

A big win for bank customers against scammers

A recent ruling from The Australian Financial Complaints Authority may herald a new era for financial scams. For the first time, a bank is being forced to reimburse a customer for the amount they were scammed.

Latest Updates

Shares

Looking beyond banks for dividend income

The Big Four banks have had an extraordinary run and it’s left income investors with a conundrum: to stick with them even though they now offer relatively low dividend yields and limited growth prospects or to look elsewhere.

Exchange traded products

AFIC on its record discount, passive investing and pricey stocks

A triple headwind has seen Australia's biggest LIC swing to a 10% discount and scuppered its relative performance. Management was bullish in an interview with Firstlinks, but is the discount ever likely to close?

Superannuation

Hidden fees are a super problem

Most Australians don’t realise they are being charged up to six different types of fees on their superannuation. These fees can be opaque and hard to compare across different funds and investment options.

Shares

ASX large cap outlook for 2025

Economic growth in Australia looks to have bottomed, which means it makes sense to selectively add to cyclical exposures on the ASX in addition to key thematics like decarbonisation and technological change.

Property

Taking advantage of the property cycle

Understanding the property cycle can be a useful tool to make informed decisions and stay focused on long-term goals. This looks at where we are in the commercial property cycle and the potential opportunities for investors.

Investment strategies

Is this bedrock of financial theory a mirage?

The concept of an 'equity risk premium' has driven asset allocation decisions for decades. A revamped study suggests it was a relatively short-lived phenomenon rather than the mainstay many thought.

Vale Graham Hand

It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.

Sponsors

Alliances

© 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.