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Four months can be a long time in investment markets and when we last wrote to you in this format, seemingly important issues have been completely overshadowed by a global pandemic that went from a minor breakout overseas on January 1 to shutting down our borders by March 20.
One could be forgiven for thinking that the equity markets are a challenging place to be, yet the domestic and international equity markets returned 11.85% and 14.94% p.a. respectively over the last 3 years.
As we hurtle inevitably into another federal election campaign, various discussion points (of course mostly negative) continue to bombard us on a daily basis as we go about our busy lives. The newspaper headlines that tend to resonate will be the negative ones and it is sometimes hard to sort the fact from the fiction particularly when it comes to investment markets.
As the Royal Commission rolls on with a seemingly endless list of scandals and the White House release an official letter bragging about the size of it’s ‘nuclear capabilities’, it can be difficult to separate the relevant and irrelevant noise as it pertains to investment markets.
As we welcome the latest addition of the ‘Australian Prime Minister’ to our parliament and the bubbling tension that is the trade war continues to threaten between the United States and China, you may be forgiven for thinking that the state of the world economy is a dire one.
The person who points the way forward and then confidently strides along the path is needed. This rare individual knows that which is common on both sides of politics is far greater than that which divides us. Presently, these common values are too often dismissed and perhaps conveniently overlooked while prodding for weakness across the political divide assumes greater importance.
We are certainly living amid volatile political times. Nationalism is tending strongly among western communities and commonly known liberties are being casually tested. Rather strangely and amid all of this, the equity and property markets have, in recent times, been at their least volatile. In a world where information sharing is occurring at light speed, has the constant noise of the news feed deafened and desensitized us?
In a period of constricted corporate growth and therefore lower tax revenue, we are all screaming for maximum parliamentary efficiency to ensure that every dollar is applied in a purposeful manner. We will keep our collective fingers crossed.
The prevailing interest rate settings have become the most economically divisive factor in matters of financial planning over the last two years. Newspapers are filled with articles addressing housing affordability, reduced income returns from cash and fixed interest investments, and inflated property and equity markets to name only a few of the concerns of the general public.
When the wheels of economic growth spin in the mud for what seems to be an eternity, we can expect that interest rates will remain within a range that is uncommonly low for some time.
