| Welcome to the July Issue of the Dashboard Newsletter.
Brexit – who would've thought it? When I last wrote 30 days ago, I was commenting on how unlikely Brexit was. How much dissatisfaction there had to be with the status quo to overcome the inertia of change. How much conviction there had to be from the general public to take a leap of faith into the relative unknown. And yet 30 days later, here we are.
It certainly caught me off guard. I think it caught a lot of people off guard – perhaps even a lot of the people who voted to exit. It definitely caught the Brexit campaigners off guard, as it became obvious soon after the vote that they had no plans in place once they won. The catch phrase soon changed from Brexit to Bregret. It definitely caught the markets off guard, as major indices around the world shed between 5% and 10% of their value in the days following Brexit. The biggest loser was the British Pound which has lost nearly 20% of its value over the past month or so. Remarkably, the markets absorbed this shock and bounced back very quickly and very strongly. Looking at the numbers over the past 30 days, most major world share markets are up strongly despite the Brexit dip. New Zealand happens to be the weakest market over the past 30 days, but is still up by 3.5%. All other markets are up between 4% and 6%, with the American Dow Jones setting new all-time highs. The biggest surprise is that the London Stock Exchange is up 12% over the past 30 days. This would partly be as a result of their currency weakening by 20% which makes their exports 20% more attractive to their trading partners. The key now is to ensure that they can negotiate to continue trading with these trading partners... It's still all very uncertain at this stage. One very positive development over the past few days was the appointment of a new Prime Minister after the resignation of David Cameron. The person that will be tasked with guiding Britain through this transition is Theresa May. I am really encouraged by this appointment. Theresa campaigned against Brexit and would rather be leading a country that is a member state of the EU. However, she has put this difference aside and embraced the fact that the public voted to leave the EU and is doing everything she can now to create the best possible outcome with the hand she has been dealt. She seems balanced in her approach, and has appointed several Brexit Campaigners to senior positions – a very smart move. She has a mammoth task ahead of her over the next few years, but she certainly seems to have started well. The fact is that it is very early days yet and I'm unsure of how this all plays out. I, along with many others, was very concerned when the vote came in, but markets have reacted, recovered, and seem to have absorbed this shock for the meantime. There is now a 2 year negotiation process to formally execute the exit from the EU, so the markets have time to digest this information at a reasonable pace. This is a good thing, but it will almost certainly create volatility over that period as the negotiations ebb and flow. Here are the numbers: |
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In terms of your Select Wealth Management investment, you will recently have received your quarterly performance report for the 30 June quarter. (Remember that you can register to receive these online if you haven't already). Unfortunately the numbers don't look great for this quarter as they capture the week immediately after the Brexit vote. However it is worth remembering that we have had several years of very strong performance, and a quarter (or even year) of poor return from time to time is all part of a longer term investment plan and not cause for panic. Your portfolio is extremely robust, well researched and diversified, so now is a time to keep your eyes on the long term prize. If you have any questions about your portfolio or want to meet to review your investment, please don't hesitate to contact me – I am here to help. Finally, a quick update on our Giving Back campaign. 30 June saw the end date for our support of Lily Leadbetter and I am very pleased to confirm that when I met with her and her family to confirm our donation, Lily was in great health and full of beans. She is recovering really well from her heart surgery, and in great spirits. Isaacs Financial Planning is very pleased to have been able to donate $4,038 to this cause – all thanks to your support and referrals. Thank you. For the second half of 2016, we will be raising as much as we can to support an Olympic Athlete. Emma Robinson is a local Wellingtonian who was born in 1994. She has been swimming competitively since the age of 12, and earlier this year she achieved the ultimate goal for any elite athlete – qualifying to represent her country at the Olympic Games. This comes off the back of years of determination and discipline – spending hours in the pool every day before most of us have even got out of bed. Reaching her goal has come at a material financial cost for Emma, as her dedication is not rewarded financially. So Isaacs Financial Planning is honoured and proud to get behind Emma and make a small contribution towards her Olympic campaign. Find out more about Emma at mifinancialplanning.co.nz/giving-back Until next time, keep well. 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.