| Welcome to the April issue of the Select Wealth Management Dashboard Newsletter.
Well, the first quarter of the year has come and gone, and for the first time in a very long time, investors are going to see a negative performance number for the quarter. Nobody ever likes seeing a negative return over any timeframe, but the reality is that negative returns from time to time are a natural part of the investment process. We have come off a long period of strong performance, so to have a marginally negative return for a quarter is not unusual, nor is it cause for major concern. Whilst the return for the quarter will only be marginally negative, there has been significant volatility over the quarter. In the whole calendar year of 2017, the S&P500 (a measure of the American share market) had a total of 15 days where the market moved by more than 1% (either up or down). So far, 2018 has already delivered 28 such days. That’s twice as many big moves relative to last year - in only the first quarter. But volatility is not something to be afraid of. The performance of your portfolio over time is not driven by what happens from day to day – it is driven by the long term trend. During volatile market environments, it is important not to be tempted into paying more attention than usual to your portfolio – this will only lead to pain and potential investment mistakes. Volatile market environments tempt us into taking unnecessary risks and making unnecessary portfolio changes. As I’ve quoted before, “Don’t just do something, sit there”. I consider myself to be an optimist, and now seems like an appropriate time to share some of my optimism about why I believe capital markets will always present a great investment opportunity. The world progresses at such an incredibly fast pace. I have 2 teenage children who don’t believe me when I tell them the internet didn’t exist when I was a kid. That’s incomprehensible to them. In their view, the internet is a basic human right. In mine, it’s a miraculous technological breakthrough. Think of all the business opportunities, wealth and improvement in lifestyle that have been created from this one single development – the internet. Knowledge has become accessible to all through Google. Shopping has become cheaper and more convenient. Businesses have become more efficient and effective through technology. Everything – music, books, selling, buying, finding your way around in a foreign city, translating a language, finding a recipe, finding a partner, learning a musical instrument - all these things seemed outrageous to the last generation, and now they are at everyone’s fingertips today. What incredible advancement. Now think of your kids or grandkids – what are they going to reflect on in 20 years’ time… Progress will march on, whether we want it to or not. We’ve gone from rubbing sticks to shovelling coal to renewable energy – who knows where next. Sure, there are some down sides to some of this progress (just look at what’s happening with Mark Zuckerberg and FaceBook), but on the whole, progress presents opportunity. Some of the biggest companies in the world today have only been around for 20 odd years (think Amazon and Google). These are the investment opportunities that seem so incredibly obvious in the rear view mirror, but so impossible to see today. I’m not a gambling man, but I would be willing to wager that in the future, you and I both will be amazed at the rate of change and progress. And therein lays my optimism. In terms of the numbers, there’s not too much to report. Despite the daily volatility, share markets have had little change over the past month or so – some marginally up, others marginally down. The NZ$ has strengthened against all its major trading partners accept the GBP (Britain still grappling with Brexit). Of note is the AUS$ sneaking up to nearly 95 cents again. The other major development is that the state pension went through the annual adjustment from $600.30 per fortnight to $616.72 per fortnight (based on a couple living together). That’s an extra $8.36 per week in the back pocket of those on the pension. I can hear the sniggers from my desk – a measly $8.36 per week. But let’s not forget that we are in one of the very few countries in the world that has a universal pension that is available to all and not means tested. This is a privileged benefit, and one that may not be available to future generations. Here are the numbers: |
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In terms of your Select Wealth Management portfolio, you will be receiving your performance reports for the quarter ending 31 March over the next short while (if you haven’t already). As I mentioned, the performance has been marginally negative for most portfolios over this period, however still strong over the past 12 months (particularly those portfolios with higher exposure to share markets). You will also be receiving your tax reports soon. If you have any questions about either of these, please do not hesitate to contact me or one of the team – we are here to help. Finally, an update on our Giving Back Program. You may recall that we are raising funds for Warwick Hollebone to put towards the cost of his Stem Cell treatment in Russia to treat his Multiple Sclerosis. I am super pleased to say that Warwick popped into the office last week and is all booked and ready to leave for his treatment on 18 May 2018. As you would imagine, he is excited and apprehensive at the same time, but very pleased to have all the details finally bedded away. Warwick – wishing you all the very best and a super speedy recovery, and looking forward to catching up when you get back! You can follow progress at www.mifinancialplanning.co.nz/giving-back.html . As always, thank you for your continued support and the referrals of friends, family and colleagues. Your kindness has directly made a difference to Warwick’s cause. Until next time, keep warm and well. Warm regards Dave and the team at Isaacs Financial Planning dave@mifinancialplanning.co.nz |
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This newsletter is intended for general distribution and does not constitute personal financial advice. Copy of my primary disclosure statement and secondary disclosure statement.