| Welcome to the first issue of the Select Wealth Management Dashboard Newsletter for 2016 – a year that will hopefully bring happiness and success for you and your loved ones.
As is customary, I'll start the year by having a crack at making a few predictions for the year ahead. Last year I got it horribly wrong and only got one of my predictions right, so hopefully I fare a bit better this year! This is by no means a guaranteed science – I take into account a range of different opinions from a variety of sources, and then consider them from my own perspective. This is what I've come up with this year: 1. One of the major developments this year will be the USA presidential elections in November. It's hard to believe that the elections are still 10 months away when it feels like they have already been campaigning for a year! It really is a long and drawn out process. The presidential race is likely to be between either Hillary Clinton or Bernie Sanders for the Democrats, and Ted Cruz or Donald Trump for the Republicans. Donald Trump's celebrity got him off to a great start in the campaign. He is charismatic, a divisive straight shooter, and has some extremely strong right leaning views on certain issues that will win him loyal support in some quarters. He could be a strong leader, but also a potential danger given some of his right leaning views. I think it will be a close race between him and Ted Cruz, but in the end Hillary will trump them all and the USA will have its first female president. 2. Brazil hosts the Olympics in August this year, and New Zealand sporting enthusiasts are excited at the prospect of an extremely successful Olympic campaign. We finished 15th in London (2012) with a total haul of 6 gold medals. This year we have over 10 genuine gold medal contenders – many of them women. I think it'll be a great campaign – perhaps even a top 10 finish. 3. Interest rates are always an important consideration – it dictates mortgage and term deposit rates. The New Zealand official cash rate starts the year at 2.50%, and I think this is about where it will finish too. If anything, it may fall slightly, but it is difficult to see an environment where it is much higher. The "lower for longer" catch-phrase is still very much a reality. 4. US interest rates on the other hand will increase this year. Their Federal Funds Rate starts the year at 0.25%, having been at 0% for nearly 7 years. There is a strong bias within the committee members that make the decision on rates (the FMOC) to increase this rate materially over the course of 2016. However, I believe that they will not be able to increase as aggressively as they would like as the first half of the year may be economically challenging. I think they will have their opportunity to raise rates in the second half of the year, and will finish the year somewhere between 0.50% and 0.75%. Whilst rising interest rates can sometimes cause a bit of short term pain, it is healthy that they are on the path to "normalisation". 5. For a bit of fun, I'll throw in a Brendon McCullum prediction. Here is a man who has been an inspirational captain for the New Zealand cricket team. He has led this team to heights and success that they haven't enjoyed for over a decade. He retires from test cricket this year, and his swan song is against the old foe Australia. It's poised to be a classic series. I think the Black Caps will win the series, and Brendan will make one last 100 (weather permitting) before the curtains fall on his illustrious test career. Go you good thing! 6. My currency prediction is the same as it has been for the past 5 or so years. I see continued downward pressure on the NZ$ against the USA$, GBP and AUS$. Whilst this isn't great for your online shopping or overseas holidays, it is a tailwind for the returns of any offshore investments you have domiciled in these currencies, so from this perspective you should be happy if I get this one right. Putting a number on it is nearly impossible, but I'll stab at somewhere near US60 cents, GBP40 pence, and AUS88 cents. 7. In terms of technological advances, the world moves fast and things are continually improving. The energy sector has for some time now been tipped as the sector where the next revolutionary breakthrough will occur. Discovering a clean energy source that is substantially cheaper to produce is the aim. Perhaps this is the year. Look out for major medical breakthroughs too – Alzheimer's tipped to be on the list. 8. A prediction on the markets this year is really tough. As always, there is a spectrum of opinions from various commentators – some are suggesting losses of up to 50% for the year, others are suggesting returns in excess of 25%. There is no doubt that the investment environment is challenging. Most global share markets have now fallen around 20% from their highs in early 2015, and reflect negative returns over the past 12 consecutive months. For the month of January alone, many markets are down 10% so far. So to a large degree, the "correction" that everyone agreed was due, has already taken place. I think markets this year will be volatile, and there will be a lot of "noise" in the media. But once all the dust settles and the headlines have sold the papers that employ them, I think the broader markets will finish the year roughly where they started (which is 10% ahead of where they are today). For me, this quote from economics columnist Morgan Housel sums up the year ahead – "My biggest takeaway from economics is that the past wasn't as good as you remember, the present isn't as bad as you think, and the future will be better than you anticipate." Make no mistake, investment professionals will be tested this year and will have to earn their salt, but I think the doomsayers will be proven wrong. Here are the numbers for the past 30 days: |
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In terms of Select Wealth Management, I am confident that the service will continue to improve this year. Last year saw a lot of change with the Discretionary Investment Management Service legislation being introduced, and a change in ownership and manager of Select Wealth Management. This year holds no such disruption or distractions, so total focus can be given to the improvement of the service. I would like to finish my first newsletter of the year by reminding you that my team and I value your business and do not take your custom for granted. Whilst all of my predictions are not guaranteed, there is one thing that I can say with absolute certainty and confidence – throughout 2016 and beyond, we will continue to strive to deliver the best possible service to you. We are committed to being with you on your retirement journey right to the end, and making that journey as successful and hassle-free as possible. If you want to meet to review your portfolio, contact me on 04 920 7061 or dave@mifinancialplanning.co.nz to arrange a meeting. I look forward to seeing you again soon. Until next time, take care. 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.