The Weekend Edition includes a market update plus Morningstar adds links to two additional articles.
A special note to our readers
Many people in the Firstlinks community have been reading my articles and editorials for 10 years or more, and worked with me for decades before that, and deserve an explanation for why I have suddenly stopped writing each week.
We also know from our Reader Surveys in Firstlinks that much of our audience is in older generations and have no doubt been through their own health issues over the years. Life deals a multitude of circumstances that we face, good and bad. So while I don't want to exaggerate my case, I want to outline briefly what has happened.
A couple of weeks ago, I went to Sydney's North Shore Hospital due to numbness on the right side of my body. Initial scans confirmed a brain tumour, and subsequent MRIs showed cancer has spread to many parts of my thalamus, a highly sensitive section in the middle of the brain. Following consultation with a leading neurosurgeon, it was decided the tumour cannot be removed by surgery due to the risks in the location.
I underwent a biopsy and exploratory surgery last week to diagnose the type of cancer, confirming glioma, which can grow quickly and destroy healthy brain cells, but with variable outcomes. Further scans showed the cancer has not spread to other parts of my body. The treatment is expected to rely on radiation targeted directly at the tumour over an initial programme of six weeks, depending on the oncology judgement and doses, supplemented by chemo.
I am 65 and I expected to live a long life, writing productively for maybe another 25 years. I am rarely sick, take no medications, drink little, never smoke, eat well. I write about superannuation and longevity and independence in a long retirement and assumed this was my future. Now, it seems unlikely.
I want you to know that while I am shocked by this turn, I will fight it with the best medical care in Australia, which is as good as anywhere in the world. I have accepted the outcome, whatever it is, and I am not thinking 'why me?' because life takes many turns. I've had a fortunate life and a wonderful family living in this great city and country.
We all have to make the most of the time we have. I am optimistic and no doubt many of you have experienced the full range of outcomes in these circumstances. Perhaps treatment will go well and somebody will remind me in five years that I wrote this too early without enough information. Friends who have faced different types of cancer have lived beyond expectations. But the doctors say I might have a few months or a year or more so I have chosen to write to my readers with some background on my absence.
Morningstar and my colleagues have been highly supportive and encouraging, focussing only on my health needs while they take care of business. I hope to return to Firstlinks in future and resume our conversations. Firstlinks has become a community of over 100,000 active users and it will long continue.
(Footnote: I am extremely touched by the hundreds of messages of support that have come in. I have read them all but my apologies that I don't have the headspace (literally, now!) to respond to each. I have posted some direct emails to the Firstlinks website as my best way to share your wishes. Many thanks.)
Graham Hand
To this week's edition...
Superannuation funds are fast becoming the dominant force in Australian funds management. Today, we feature an interview with one of the most powerful and well-respected investment bosses in the industry, John Pearce of UniSuper. John covers an array of topics including UniSuper's recent investments, why the 60/40 portfolio's time has come, how history isn't a guide to the future and governments not central banks are to blame for stubborn inflation.
The ASX 200 is around the same price as it was in 2007. That's excluding dividends, though even with their inclusion, Australian stock returns have been mediocre. It would be easy to blame the GFC or pandemic, though Roger Montgomery thinks there are deeper, structural issues at play. And these need to be addressed for returns to improve.
ASX small caps have underperformed larger companies for a long time. It's likely to turn around at some point, but when is impossible to say. Tribeca's Simon Brown explains why small caps are worth exploring now and looks at three stocks that he believes are set to take off.
It's said that real estate is Australia's national sport. Sad, though perhaps true. Because of this, there are a lot of opinions on the issue, much of it driven by vested interests and emotion. Phoenix Portfolios' Stuart Cartledge has an excellent piece laying out the industry's supply and demand issues, and he also throws in several stocks that should benefit from the long-term housing shortage.
It's difficult to predict when the next recession will happen. That said, it doesn't hurt to consider which investments are likely to do best in a future downturn. Morningstar's Amy Arnott takes a deep dive through history to look at investing during a recession from multiple angles, including asset classes, factors, and sectors.
The RBA went on a bond buying spree during the pandemic and is now sitting on tens of billions in paper losses. That's pushed its balance sheet into negative equity. If it were business, it'd be bankrupt. As it's not, what does it mean for the RBA going forward and what lessons can be learned from the poor decisions of the past? Tony Dillion has some answers.
For 30 years until 2019, stocks and bonds had a negative correlation - when stock prices rose, bonds declined, and vice versa. Many investors were shocked when the correlation turned positive in 2022. MFS' Rob Almeida says get used to it because what investors thought was normal for 30 years was anything but. If he's right, it has huge implications for future asset allocation.
Two extra articles from Morningstar for the weekend. Christine St Anne asks whether Westpac can deliver on growth and dividends, and Morningstar looks into whether Xero offers value after disappointing the market with its result.
Lastly, in this week's whitepaper, Meg Heffron, investigates the ins and outs of SMSF pensions for 2023-2024.
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Weekend market update
On Friday in the US, the 'Magnificent Seven' tech stocks led a Wall Street surge higher with the S&P 500 finishing 1.6% higher, and the NASDAQ up 2.1%. Helping market sentiment was a steadier US Treasury market, with the 10-year yield slipping one basis point to 4.62%. Oil also steadied with Brent retaking the $US80 a barrel level. Gold was lower, while iron ore extended its rally, pressing through $US126 a tonne in Singapore.
From AAP Netdesk:
On Friday, the Australian share market pulled back from its three-week highs, following hawkish comments by US Fed chairman Jerome Powell. The benchmark S&P/ASX200 index finished down 38.4 points, or 0.55%, to 6,976.5, while the broader All Ordinaries fell 38.5 points, or 0.53%, to 7,176.6. For the week, the ASX200 was basically flat, dropping 1.7 points.
On Friday every sector in finished in the red. Utilities were the biggest laggard, dropping 1.7%. Origin Energy fell 2.5% to $8.65 as various parties manoeuvred ahead of the November 23 shareholder vote on its pending $16 billion takeover by a private equity consortium led by Brookfield.
All four big retail banks finished lower, with NAB down 1.7% to $28.46, Westpac down 1.6% to $20.86, ANZ dropping 1.3% to $25.47 and CBA falling 0.8% to $101.32.
In the heavyweight mining sector, BHP gained 0.7% to $45.27, Fortescue climbed 1.3% to $23.75 and Rio Tinto added 0.3% to $120.42.
News Corporation's ASX-listed CDIs gained 0.2% to $34.75 after the media conglomerate posted $US2.5 billion ($A3.9 billion) in revenue for the three months ended September 30, a 1% increase from a year ago.
APM Human Services plunged 20.7% to an all-time closing low of $1.76 after health and human services provider's CEO told its annual general meeting that record-low unemployment rates were affecting client flows into the employment programs it runs for governments in Australia and the UK.
ResMed fell 2.6 per cent to $22.39 as the respiratory product device maker announced a restructuring of its leadership team, with several new roles added and the retirement of current president and chief operating officer Rob Douglas.
In small caps, Pantoro soared 23.1% to a two-month high of 4.8c after agreeing to sell certain mineral rights at its Norseman gold project in Western Australia to Mineral Resources for up to $60 million.
Curated by James Gruber and Leisa Bell
A full PDF version of this week’s newsletter articles will be loaded into this editorial on our website by midday.
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