November 2015 Review & Comments
Written by Tony Gray   
Tuesday, 19 January 2016 09:18

Best wishes for the Christmas and New Year holiday season, from me and all the staff at TG Financial.  My appreciation also to TG Financial staff for their efforts during the year.

We are closing the office mid-day on Tuesday the 22nd of December and re-opening on Monday the 11th of January.  We will periodically check emails and phone messages and please note my mobile number is 0419 728 517 - best to send a text message if possible - as on occasion I will be out of phone range (or simply not carrying my phone).

The year has definitely not been an easy one for investors.  The local sharemarket rose strongly – up more than 10% within the first 3 months of the year.  At the time of writing the index is down ~4% for the calendar year but feels worse, having fallen from the March peak.

We are not finding any asset class offering better than average value that does not involve a higher degree of risk (e.g. emerging markets are cheap, but returns tend to correlate with Australian equities, with higher financial, material and energy exposures).

Interest rates in Australia are at record lows and with falling commodity and energy prices and a very flat bond yield curve and slow economic growth - the consensus view seems to be that we are in for a period of low returns.

The income yield from Australian shares and listed property is well above that available from deposits or bonds – which would normally support buying the former.  The issue as we see it is that there are some very large imbalances in the local economy that heighten risks.  I will be broadcasting an outline of the issues for investors to think about.

International shares are a mixed bag – US equities appear expensive and at the end of an extended bull market.  European equities offer somewhat better value, but with negative real rates, money printing and major social and budgetary issues.  Asia offers better growth potential, but economies are tied in to the China slow-down/economy in transition risks.

The Australian dollar is most likely going to fall further in light of the continued falls in commodity and energy prices.  Recently the metal and oil falls have been rapid and significant – perhaps a sign of capitulation?

Please contact me with any questions about your planning or portfolio position.

Best wishes,


A.W. (Tony) Gray BCom, LLB, Dip FP, GDipAppFin, CFP, FFin

Principal, TG Financial


Please treat the above comments as General Advice or general information, with no action to occur until we have considered with reference to your financial position, needs and goals.

Last Updated on Tuesday, 19 January 2016 09:26
 

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