Introduction The surge in inflation coming out of the pandemic and its subsequent fall has been the dominant driver of investment markets over the last two years – first depressing shares and bonds in 2022 and then enabling them to rebound. But what’s driving the fall, what are the risks
Introduction After poor returns in 2022 on the back of high and rising inflation, a surge in interest rates, the invasion of Ukraine and recession worries, 2023 was a far better year for investors as inflation fell and investment markets anticipated lower interest rates ahead. This saw average balanced growth
Five key themes from 2023 Despite lots of angst at the start of the year, 2023 turned out far better than feared. Key big picture themes of relevance for investors were: Stronger than feared growth. Despite fears that recession was inevitable, on the back of multiple rate hikes and a
Introduction At its December meeting the RBA left the cash rate on hold at 4.35%. This was in line with our own view & that of most economists along with money market expectations. It followed a 13th hike at its November meeting which meant a total of 425 basis points
Introduction Changes in the value of the Australian dollar are important for Australian investors as they directly impact the value of international investments and indirectly effect the performance of domestic assets like shares via the impact on Australia’s global competitiveness. They also impact the cost of travelling overseas and import
Introduction There is an ever-present worry list surrounding investment markets – usually involving some combination of concerns about economic activity, inflation, profits, interest rates, politics, natural calamities, wars, etc. It makes it hard for investors to stay focussed and avoid silly mistakes. Uncertainty is magnified by perennial predictions of a
Introduction The big surprise in the Australian housing market last year was how quickly home prices fell with RBA rate hikes. But the big surprise this year is how they rebounded when most including myself were looking for further falls. October CoreLogic data showed another 0.9% rise in national home
Introduction Starting in the early 1980s investment returns were spectacularly strong. Sure there were bumps along the way like the 1987 share crash, but Australian balanced growth superannuation funds returned an average 14.1% pa in nominal terms and 9.4% pa in real terms (i.e. after inflation) between 1982 and 1999.
Introduction The war in Israel is terrible from a humanitarian perspective. From an economic and investment perspective the concern is that it will lead to a surge in oil prices that will add to inflation, keep interest rates higher for longer and add to the risk of recession. This note
Introduction In the fourth year of my career the share market crashed. In one day, US shares fell 20% and the day after Australian shares fell 25%. From the months just before to the months just after US shares had a total 35% fall and Australian shares had a 50%
– and how do valuations look now? Introduction It’s logical that the cheaper you buy an asset the higher its prospective return might be. However, this is frequently forgotten with investors often tempted to project recent returns into the future regardless of valuations. A valuation measure for an asset is
Introduction For years now there has been much discussion about poor housing affordability in Australia but debate about how immigration contributes to this issue is often lacking. For a country with abundant land, it’s ironic that housing affordability is so poor. Much of the focus has been on grants and
