While we must expect volatility, I remain concerned with the long-term damage that has been done to economies around the world as the “off” switch has been flicked in response to COVID-19.
In particular, we’re now looking at the effect this is having on revenues and earnings for businesses of all kinds. Indeed, we may not see the full long-term effect of the restrictions for at least another three to six months.
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Visibility is now required over the broader damage to this revenue. Key questions arise around what the earnings of listed companies will be and what we might expect going forward.
I expect that the losers will well outstrip the winners — but there will be winners.
This period of a market driven by COVID-19 pandemic swings is no exception. The most asked question is “are we there yet … when should we start buying?”
In short the answer is “not yet”. While I agree wholeheartedly with the saying “never waste a good crisis”, I will be waiting on the sidelines until we see the volatility dissipate. You might reasonably ask: why wait?
The Partners, Advisory Board and staff of Hamilton Wealth Partners are saddened with the passing of Michael.
Our inaugral Chairman until 2017, member of our Advisory Board, advisor, mentor and friend to our business since inception.
Our deepest sympathy to Fiona, Henry, Olivia, Isabelle and their families.
Despite 2020 starting where 2019 had left off, world markets ended February substantially lower. The global MSCI all Country World Index (ACWI) was down 7.69 per cent, while the domestic S&P/ ASX 200 dropped 8.21 per cent.
Yet earlier this week, the Dow Jones had its largest ever points gain of 1294 points, or 5.1 per cent, among a number of highly volatile sessions.
We do live in unprecedented times. I know the saying is “beware those words”, but let’s recognise that after this week’s cuts, Australian official interest rates and US rates are at historic lows.
Cash deposit rates will now struggle to keep pace with inflation, instantly pushing investors into riskier investments.
Ironically, conservative investors who might have avoided the worst of the recent sharemarket drop by moving into cash will be among the first hit.
“This is the shape of the market now – it’s volatile and it’s actually been like this for more than a year … investors have opportunities in this atmosphere, but they have to accept the volatility,” said Will Hamilton of Hamilton Wealth Partners.
Australian Securities and Investments Commission chairman James Shipton has revealed stockbrokers are under investigation for evading financial advice laws by “mis-classifying” retail clients as sophisticated investors and selling them poor-performing listed investment funds.
The ASIC probe is part of its analysis of commissions, or “stamping fees”, paid by listed fund managers to stockbrokers and other financial advisers for selling newly-floated listed investment companies (LICs) and listed investment trusts (LITs) to mum and dad investors.
Several other high-profile fund managers and financial advisers have called for the government to fix the loophole, including Magellan Financial Group’s Hamish Douglass, PM Capital’s Paul Moore, Will Hamilton and Koda Capital’s Paul Heath.