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

Australian stocks will crush housing over the next decade, one year on

Last year, I wrote an article suggesting returns from ASX stocks would trample those from housing over the next decade. One year later, this is an update on how that forecast is going and what's changed since.

Australia’s shameful super gap

ASFA provides a key guide for how much you will need to live on in retirement. Unfortunately it has many deficiencies, and the averages don't tell the full story of the growing gender superannuation gap.

9 lessons from 2024

Key lessons include expensive stocks can always get more expensive, Bitcoin is our tulip mania, follow the smart money, the young are coming with pitchforks on housing, and the importance of staying invested.

The 20 most popular articles of 2024

Check out the most-read Firstlinks articles from 2024. From '16 ASX stocks to buy and hold forever', to 'The best strategy to build income for life', and 'Where baby boomer wealth will end up', there's something for all.

2025: Another bullish year ahead for equities?

2024 was a banner year for equities, with a run-up in US tech stocks broadening into a global market rally, and the big question now is whether the good times can continue? History suggests optimism is warranted.

Time to announce the X-factor for 2024

What is the X-factor - the largely unexpected influence that wasn’t thought about when the year began but came from left field to have powerful effects on investment returns - for 2024? It's time to select the winner.

Latest Updates

Shares

Howard Marks warns of market froth

The renowned investor has penned his first investor letter for 2025 and it’s a ripper. He runs through what bubbles are, which ones he’s experienced, and whether today’s markets qualify as the third major bubble of this century.

Property

What to expect from the Australian property market in 2025

The housing market was subdued in 2024, and pessimism abounds as we start the new year. 2025 is likely to be a tale of two halves, with interest rate cuts fuelling a resurgence in buyer demand in the second half of the year.

Superannuation

How to fix the Commonwealth Superannuation Scheme

The scheme has not been updated since it was established and is no longer fit for purpose. Members now find themselves disadvantaged in several important ways versus those in other superannuation funds.

Investment strategies

5 key investment themes for the next decade

AI has helped markets to new highs and rightly dominated news headlines. Yet there are other themes, including niche ones such as gene editing, which are also expected to drive investment returns over the next decade.

Shares

New avenues of growth make 2025 exciting for investors

Investors need to be more discerning this year as headline valuations are high and the economic cycle turns. Dig a little deeper, though, and there are big opportunities in overlooked shares with strong tailwinds.

Investment strategies

The pros and cons of debt recycling strategies

Debt recycling is a powerful strategy for those juggling the seemingly competing goals of debt reduction and building an investment portfolio. Yet it's often misunderstood because it isn't just a single strategy.

Investment strategies

Australia is out of step on nuclear power

Globally, nuclear power is gathering momentum as a differentiated power source in the energy transition to zero carbon emissions. Yet in Australia, a nuclear ban remains, making us an outlier among our Western Allies.

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.