| Welcome to the February Issue of the Dashboard Newsletter. Hopefully you have had a chance to enjoy some of this cracking weather we have had over the past month – it's been one of the better summers that I can recall.
There's a lot to talk about this month, so I'll kick straight into it starting with international politics. The US Elections are heating up with the primary elections well underway and the race to the White House intensifying. Presidential hopefuls Trump, Clinton, Sanders, Rubio and Cruz have their gloves off, and the debate is intense. Whilst the theatrics of it all can seem quite distracting, the outcome is important and deserves some of our attention. Politics aside, the White House's stance on certain matters can influence investment outcomes. Closer to home, the Reserve Bank of New Zealand has left our Official Cash Rate unchanged at 2.5%, and the tone has become more dovish – pointing to potential rate cuts, or at least "lower for longer". This wasn't entirely unexpected, but their bias has clearly shifted from "neutral" towards "easing". Factors such as slowing growth in China, lower commodity prices leading to lower inflation, and increased global market volatility have been cited as reasons for the change in tone. Another interesting factor that will influence the Reserve Bank's position is the housing market. In the past, the Reserve Bank has had to be wary of low interest rates fuelling an already overheated Auckland property market. This concern seems to finally be easing, with QV's national average home price falling for the first time over the past month for as long as I can remember. A cooling property market will make the Reserve Bank's job much easier and give them a bit more slack in the reigns to focus on other factors. This is a healthy development. In terms of global markets, the past month has seen continued volatility. The oil price has continued to slide and is now $29 per barrel – a long way from the $100 per barrel it was 2 years ago. (I always get frustrated when the pump prices don't reflect these moves down!) Most share markets are now down between 10% and 15% for the 2016 calendar year – the exceptions being New Zealand (largely unchanged) and Japan (down 21%). These are extreme movements, but not to be unexpected from time to time. You only have to look back to 2011 to find similar movements in markets, yet the returns since then have been strong. So now is a good time to practice patience. I was once given some interesting and good advice – "Don't just do something – sit there". Kneejerk reactions can lead to poor decisions. |
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There is not too much to report with Select Wealth Management this month. There have been no changes in the past 30 days. We meet with JMIS in early March for the quarterly review, so may see some changes then. In the meantime, it's more of the same. I am also pleased to say that the performance from the Select Wealth Management portfolios continues to meet my expectations. Our portfolios have held up well under the recent stresses of the market volatility. Furthermore, the NZ Super fund recently released their performance for the calendar year 2015 which was 6.5% before tax. This fund is the equivalent of Select Wealth Management's Growth Portfolio which over the same period delivered a return of 5.3% after tax – a comparable if not better result. This is a very respectable outcome. I thought I would finish on a slightly lighter note this month. My job requires reading a lot of financial literature. The more I read the more I am reminded that it is important to filter financial journalism in media – there is a lot of gibberish and nonsense. Here are a few stupid things I hear a lot. "He predicted the market crash in 2008." He also predicted a crash in 2006, 2004, 2003, 2001, 1998, 1997, 1995, 1992, 1989, 1984, 1971... [Guy on TV]: "It's time to [buy/sell] stocks." Who is this advice for? A 20-year-old with 60 years of investing in front of him, or a 82-year-old widow who needs money for a nursing home? Doesn't that make a difference? "Investors are fleeing the market." Every stock is owned by someone all of the time. I once asked a very successful fund manager if he was "buying or selling". He replied by saying "whatever everyone else is doing, I'll be on the other side". Like I said – he is very successful. In closing, a quick update on our Giving Back initiative. I am very pleased to report that we are on track to reaching our goal of donating $5,000 to Lily and her family as they go through the struggle of waiting for Lily's heart transplant. Check out mifinancialplanning.co.nz/giving-back for more information. Thank you so much to those of you that have referred friends and family to us over the past month and helped this cause – we really appreciate it!! Keep them coming. Warm regards 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.