| Welcome to the February issue of the Select Wealth Management Dashboard Newsletter – chocolatiers and florists favourite month of the year.
The past month has seen some major developments around the world. The one that is grabbing the media headlines (for obvious reasons) is the Coronavirus. So far, over 45,000 people have been diagnosed with the disease, and there have been 1,116 deaths. The fear of course is the risk of this becoming a pandemic (defined as “a worldwide spread of a new disease”). Fortunately, authorities seem to be getting the condition under control as the rate of new cases is diminishing. There are also increasing numbers of infected patients recovering and being discharged. So on balance, I am optimistic that this will not become a material issue moving forward. Obviously, Coronavirus is a terrible development and thousands of families have been devastated. But at the same time, it is important to put into context the death toll of 1,116. Compared to some other causes of death, the Coronavirus death toll seems relatively low. According to the World Health Organisation, there are 1.35 million deaths caused by motor vehicle accidents around the world every year. That’s a staggering 3,698 deaths every single day. Tuberculosis – a condition I thought had more or less been eradicated – still causes 3,561 deaths every single day. These numbers give me comfort that Coronavirus is not an immediate global threat just yet. The other major development over the past 30 days was Brexit. It actually happened! After 3 ½ years of painfully extracted negotiations, Britain finally left the European Union on 31 January. Brexit has dominated media headlines for years – from speculation and predictions through to headlines of ultimate doom or new era optimism. Media outlets have loved this issue and sold a fortune of advertising off the back of it. Ironically, the actual event went by relatively unnoticed with minimal media coverage. Now that the umbilical cord has finally been cut, the reality of Brexit will take hold over the next few years. My view remains that Britain will feel pain in the short to medium term. The daunting task that lays ahead for Britain now is to go out into the world and make new friends and negotiate new trade deals. I imagine that could be a struggle. 
Coronavirus and Brexit are good reminders that trying to “time the market” is a futile strategy. Almost every year, something will happen that doesn’t make any sense at all. Coronavirus caught investors off-guard last month, and there will be something else next month, year, or sometime in the future. Something is bound to defy expectations whether it involves geopolitics, irrational market movements, corporate takeovers, huge gainers, huge losers, or any number of crazy news or events. Over the years, I’ve learned not be surprised that I’m surprised - these things can be completely random at times. So if “timing the market” isn’t the best strategy, what is? Discipline is a good place to start. And having a robust plan. You and I have very little control over what happens in the markets, but we have absolute control over how we plan for it and react to it. A well diversified portfolio that is matched up against your personal appetite and capacity for risk usually wins the race. Focus less on the returns from one month to the next, and more on what’s important to you - your financial goals. When do you want to retire? How much income will you need? How much can you afford to save every month right now? Over time, the investment returns will take care of themselves. The old adage “Perfect investment recipe – 2 cups stocks, 1 cup bonds, simmer for 30 years” is true. We don’t need to tinker with this recipe, we just need to put a plan in place to take full advantage of it. Below are the numbers for the past 30 days. Interestingly, most markets are up over the past 30 days - the exception being the Asian and British markets (probably linked to Coronavirus and Brexit). Mortgage and deposit rates remain incredibly low after the Reserve Bank kept the Official Cash Rate unchanged yesterday, and the average cost of a home had a decent bump upwards. |
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In terms of your Select Wealth Management portfolio, there is nothing specific to report this month. After a stellar year of performance in 2019, portfolios continue to impress in the first few months of 2020. We meet with researchers JMI Wealth later this month, so I will report back if there are any significant developments or announcements. But at this stage, it’s more of the same. Finally, a quick update on our Giving Back program. January was a typically quiet month, so we’ve had a relatively slow start to the campaign (which was to be expected). But the year is starting to shape up well, so I am confident that we will reach the target of $2,500 for the great team at Birthright Kapiti. As always, thank you for the referrals of your friends, family and colleagues which makes it possible for us to continue with this program. You can follow progress of the campaign at https://mifinancialplanning.co.nz/giving-back.html 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.