Or something worse?
The last few weeks have seen the investment scene hit another rough patch. So is this just a seasonal glitch or something more sinister in the making? Read more here
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
12/05/15: The interest rate wheel
It doesn't need to be difficult...
Forecasting interest rates is a tough job. Even when you get it right, there's no guarantee the market will react as you expect. The good news is you don't need to be able to forecast rates to earn the returns from fixed interest. Read more from Jim Parker
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
08/05/15: Words of wisdom from two old pros
Quotes to invest by...
With interest rates at an all time low, many cash investors are now, somewhat reluctantly, being forced to consider alternatives. But with this comes some danger and discomfort.
At 81 and 94, Warren Buffett and Charlie Munger have earned the market's respect through performance, but they've also earned the appreciation of the broader investment community through their willingness to share what they've learned and how they've been so successful.
So it seems timely to revisit some of their more famous quotes and advice...
Warren Buffett:
“Time is the enemy of the poor business and the friend of the great business.”
"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."
“I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”
“Price is what you pay; value is what you get.”
Charlie Munger:
“When any guy offers you a chance to earn lots of money without risk, don't listen to the rest of his sentence. Follow this, and you'll save yourself a lot of misery.”
“People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There's always been a market for people who pretend to know the future. Listening to today's forecasters is just as crazy as when the king hired the guy to look at the sheep guts.”
I'm not sure that I entirely agree with Charlie's last point, but I'm happy to give him due deference.
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
06/05/15: Treasurer vows no super tax changes
Encouraging news
As the Federal Budget moves ever closer (next Tuesday evening), the rumour mill is working overtime, so it was encouraging to get some clarity from Treasurer Joe Hockey this morning, with regard to possible tax changes on superannuation. Read more here
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
05/05/15: Interest rates cut
A record low...
Today the Reserve Bank of Australia (RBA) finally decided to take the plunge and reduce the cash rate by 25 basis points to 2.00%, a record low.
This wasn't a huge surprise as economists this morning were factoring in a 78% chance of a rate cut today. Interestingly, the RBA provided no outlook statement for interest rates going forward, so unless the Australian economy deteriorates significantly from here, this could be the last of the rate cuts. We'll see.
At the time of writing, the Australian share market was initially up 1.1%, however has since fallen into negative territory as the Australian dollar, surprisingly, went up in defiance of the interest rate cut.
While this is welcome news for borrowers, the decision will put more pressure on investors, particularly retirees, with significant cash/term deposit holdings - interest rates are low and will stay low for some time to come. If you need income, it's time to consider your options.
On a different matter, the Federal Budget will be announced next Tuesday night (12 May) and, as usual, the rumours have been flying fast and furious, from superannuation to negative gearing to pensions.
Our advice is to ignore the background noise. Typically, the lead up to every Federal Budget is a showcase of worse case scenarios and general fear mongering, coming from both side of politics, usually leading to fairly unspectacular, watered-down announcements on the night.
We'll distill the budget details into a simple, easy to understand report for our clients soon after budget night, once we've had a chance to thoroughly weigh-up the proposals on the table. More importantly, we'll contact you individually should there be anything important to discuss.
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
10/04/15: Australian home prices and interest rates
Where are we headed?
The interplay between falling interest rates, the Australian dollar and housing demand is a complex one. While the RBA would dearly love to see our dollar fall, rising house prices, particularly in Sydney and Melbourne, isn't part of the script. So what happens if, as widely expected, interest rates are cut again in the coming months? Another interesting read from AMP's Dr Shane Oliver.Read more here
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
02/04/15: What is 'risk' in investing?
Comments from Dr Shane Oliver...
An interesting, common sense article about investment risk from AMP's Dr Shane Oliver. An easy read. Click here
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
27/03/15: $20 oil could be a reality
24/03/15: Cast in iron?
Protecting your portfolio against investment 'fashion'
Dimensional VP, Jim Parker, discusses the pitfalls of building investment strategies around "hot" sector stories. Read more here
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
18/03/15: China: Boom or Bust?
…or something in between?
China's lack of transparency often sends the wrong signals to the rest of the world. We all know that China's economy has slowed, but is it heading towards a bust, or is this yet another false alarm? Read more here
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
13/03/15: Reasons to be optimistic on Eurozone equities
Not so bad…
Often written off as a 'basket case' region, Europe, particularly European shares have some serious growth potential. Does your super fund have exposure to Europe? Read more here
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
04/03/15: Australian economy still in the doldrums...
More help needed...
Through 2013-14 it seemed the Australian economy was starting to transition away from a reliance on mining investment to more broad based growth. Unfortunately this transition has wavered a bit recently and growth has remained below trend. Fortunately, the RBA has recognised the problem and resumed cutting interest rates. This note looks at the outlook for growth and rates and what it means for profits and investors. Read more here
Rick Maggi Westmount Financial Clear View. Better Focus.
13/02/15: Shares surge to new highs
Planets aligned...
The share market rallied to a six-year high today due to a positive cocktail of factors, including Rio Tinto's massive shareholder returns, rising oil prices, decent company earnings, the potential for more interest rate cuts, and optimism over Greece and the Ukraine.
The market's strongest one day gain in six weeks sent the All Ordinaries and S&P/ASX200 indices to their highest levels since mid-2008.
At the close today, the benchmark S&P/ASX200 index was up 133.9 points, or 2.33%, to 5877.5. The broader All Ordinaries index was up 127.8 points, or 2.24%, to 5835.5.
Interestingly, the big miners led the gains, with BHP up 4.8% to $32.17 and Rio Tinto up 6.5% to $63.79 after announcing a $US2 billion share buyback, while RBA governor Glenn Steven's comments today that more than one further rate cut may be needed if unemployment continues to rise lifted the banks and Telstra as the desperate search for yield continues.
Rick Maggi Westmount Financial
03/02/15: RBA cuts rates by 25bps, shares rally
An 'insurance policy' for growth...
The official cash rate has been reduced to a new record-low of 2.25 per cent after being left on hold at 2.5 per cent since August 2013.
The Reserve Bank’s decision has come as a surprise: a survey of 30 economists and commentators found that 28 expected the cash rate to remain unchanged.
Westpac, NAB and ANZ all subsequently forecast that rates would fall some time in the first half of 2015.
The two survey respondents who predicted today’s cut were Bill Evans, chief economist at Westpac, and Nathan McMullen, head of product and digital at RAMS.
Mr McMullen said that with consumer confidence and inflation low, the Reserve Bank would cut rates to help boost the economy and depreciate the Australian dollar.
Several of the other survey respondents also gave an indication of what forced the Reserve Bank to act, even though they didn’t expect it to happen as early as today.
ME Bank’s general manager of markets, John Caelli, said growth and consumer confidence have been weaker than the board would like.
“Market sentiment has fundamentally shifted over the past two months as oil prices have plummeted and concerns about deflation in Europe grow. This has led to markets expecting 0.50 per cent in rate cuts in the first half of 2015,” Mr Caelli said.
The cut is being seen by many as an 'insurance policy' on growth going forward.
Of course, while this is great news for borrowers, it adds further pressure on investors, particularly retirees, with significant exposure to cash. With that in mind, it will be important for investors in search of a decent yield to be particularly wary of new and wonderful investment products promising higher yields - so please, run it by us before taking the leap!
At the time of writing, the Australian dollar has responded to the rate cut by falling from 0.78 to 0.77, while the local share market has rallied about 1.6%.
Rick Maggi Westmount Financial
28/01/15: Weather vs Climate
Are you informed or inundated?
Dimensional's Jim Parker illustrates the folly of trying to keep up with market sentiment based on the news of the day - a quick, easy to understand article worth reading. Read more here
Rick Maggi Westmount Financial