19/12/13: The Fed finally tapers

...and what it means for investors

Overnight the US Federal Reserve announced that it will begin carefully and slowly scaling back its massive stimulus program next month. It is the central bank's first step towards winding back the stimulus that has helped the US recover from its worst recession since the 1930s and a sign that the US economy is recovering.

In response, the US share market surged by almost 2% and at the time of writing, local markets are up by about 1.5%. Our local currency immediately dropped to 88.18 US cents but then quickly recovered to 89.45 US cents as investors digested the news. Most importantly, this should be viewed as good news. AMP Capital's Dr Shane Oliver discusses the implications for investors here. Rick Maggi (Westmount. Financial Solutions.)

30/11/13: Deflation or rising inflation?

What is the risk?

AMP Capital's Dr Shane Oliver looks discusses the potential consequences of a deflationary spiral versus rising inflation on your hip-pocket. Enjoy. Read more here  Rick Maggi (Westmount. Financial Solutions.)

15/11/13: China on track

Better than expected...

China's growth cycle is stabilising and that's good news for Australia's economy, our markets, and possibly your super fund. AMP Capital's Dr Shane Oliver weighs in on recent fears over slowing Chinese growth with a typically calm, well balanced commentary. As always, his article is easy to read and not overly technical. Enjoy! Read more here  Rick Maggi (Westmount. Financial Solutions.)

04/11/13: Avoiding excess risk in a low-interest environment

Don't upset the fine balance...

The strong growth in the prices of many Australian shares over the past year is attributable, in part, to the buying of yield-hunting investors. A number of high-yielding financial stocks, for instance, are trading at or near to record highs.

Predictably, in the prevailing low-interest environment, many investors are now turning to more concentrated portfolios of high-yielding shares in an effort to maintain their investment yields and their lifestyles. But, unfortunately, this pursuit of yields comes at the cost of undertaking a higher level of risk for an investor's overall investment portfolio.

Rather than exposing portfolios to higher risk and upsetting carefully diversified portfolios in a hunt for income, investors should focus more on a portfolio's total return – that is the combination of its income and capital growth. With this approach, investors in need of more income than produced by a portfolio draw an amount taken from their portfolio's total return, taking into account cash-flow and capital appreciation.

In this way, investors can remain on track to achieving their long-time goals without upsetting their portfolio's diversification and without taking greater risks. Rick Maggi (Westmount. Financial Solutions.)

24/10/13: Retail sales: Light at the end of the tunnel

Looking better...

Retail sales growth has been poor for four years now reflecting a combination of consumer caution, falling wealth, “excessive” interest rates, the strongly rising $A, surging electricity prices, slowing income growth and job insecurity. With some of these factors now fading or set to fade, retail sales growth is likely to pick-up a notch next year.

This should see growth pick up to around 4 to 5% pa from 2-3% over the past four years.  Read more here  Rick Maggi (Westmount. Financial Solutions.)

08/10/13: The US budget standoff

Here they go again...

With US Republicans and Democrats going head to head over budget and debt negotiations, the rest of the world looks on powerless and bemused. Beyond some of the media hysteria, in this article AMP Capital's Shane Oliver provides a balanced, sober look at the debt ceiling standoff and the likely outcome.  Read more here  Rick Maggi (Westmount. Financial Solutions.)

25/09/13: The outlook for unlisted commercial property

Have returns peaked?

Australian unlisted commercial property returns have been strong over the last three years, recovering from the GFC driven slump of 2008/09. So can these high returns be maintained or are we moving into a lower return phase? Read more here  Rick Maggi (Westmount. Financial Solutions.)

09/09/13: Australia's housing outlook

...and implications for investors

In this commentary, MLCs Senior Investment Strategist, Michael Karangianis, takes a balanced look at our housing sector, contrasting the Australian landscape with experiences overseas. A good, simple read. Read commentary here Rick Maggi (Westmount. Financial Solutions.)

05/09/13: Australian profits, the economy and shares

Another from Dr Shane Oliver

In this update, AMP Capital's Dr Shane Oliver takes a close look at where we are right now in the cycle, company profits and the risks and opportunities going forward. In a background of growing worry over Australia's economy, this is a timely and poignant article. Read more here  Rick Maggi (Westmount. Financial Solutions.)

01/09/13: The US fiscal cliff, debt ceiling and economic outlook.

Oliver's Insights for January 2013

This note looks at the deal to avert the US fiscal cliff along with its debt ceiling and broader economic outlook. Generally pretty positive for 2013 (easy reading). Enjoy! Rick Maggi. Read here

29/08/13: Another Asian market crisis?

Potential implications for investors...

AMP Capital's Dr Shane Oliver weighs in on the recent round in emerging market currencies and assets. A cautionary article worth a read. Rick Maggi. Read more here

05/08/13: Consistency over the long term

Australian and international equities. Which sector performed the best?

Picking the market sector that will outperform and timing it to maximise returns is a difficult thing to do. Produced by Vanguard Australia, the following tables graphically illustrate the performance of different sectors (within the Australian share market) and the performance of different regions (international shares).

The take away is simple one. Building a portfolio within broadly diversified equity funds at the core can help lower risk and smooth out peaks and troughs in returns over time.  Rick Maggi

Australian Equities      International Equities

08/08/13: The Federal Election

Implication for investors...

In this article AMP Capital's Dr Shane Oliver takes a look at potential implications for investors as move towards and beyond the Federal Election. Interesting reading. Rick Maggi.  The Federal Election

26/07/13: The Vanguard Index Chart 2012-13 (Westmount Clients Only)

Some eye candy...

Every year Vanguard releases it's 'Vanguard Index Chart' and it's always worth a look. The chart illustrates what the value of $10,000 invested twenty years ago might be worth today had you invested in various sectors such as Australian shares, commercial property, cash etc. Along the twenty-year journey you see the impact of important events (both positive and negative) such as 9/11, US subprime and the Japanese Tsunami on markets and the value of the original investment. Vanguard also includes a second graph, called 'the power of diversification' which shows the performance of each sector in percentage terms, every year, for the last twenty years.

Seeing visual proof of market volatility (all of them), each having their day in the sun, followed by less than happy times, serves as a potent reminder of the importance of diversification and patience. We can all do with some gentle encouragement, especially during tougher, challenging times, so I like to keep this chart on my wall!  Rick Maggi.    View charts here

26/07/13: New normal, old story

'Outside the Flags' by Dimensional VP, Jim Parker

"Low returns are shaping as the new normal" That was the headline in The Australian Financial Review in early July 2012 in anticipation of another grim year on global equity markets for Australian investors. How did that forecast turn out?  Rick Maggi  Read more here