| Welcome to the July issue of the Dashboard Newsletter. While we here in New Zealand are fortunate enough for our lives to be more or less back to normal, many countries around the world are still grappling with Covid 19 and are in various degrees of lock down. The bulk of the damage is now occurring in third world countries (Mexico, India, Brazil, Columbia and South Africa), and unfortunately I find it difficult to imagine how these countries get on top of the situation. Meanwhile America is still reporting record numbers of new cases, and Australia seems to have fallen back into uncomfortable territory. In hindsight, the "Go Hard, Go Early" strategy employed here seems to have been effective and appropriate.
Covid 19 and lockdown have driven a lot of change in many people's lives. Many of my friends and colleagues have changed the way they do things. Simple things like how they buy groceries, the way they work, their exercise habits. Some people are cooking more, working less, FaceTiming friends and family more often. Social media has definitely been one of the largest beneficiaries of lockdown. As people have more time on their hands, they spend more time on FaceBook, Instagram and Twitter. It fills our time and keeps us informed with Covid developments. I am generally sceptical of social media. I know that on balance, social media is probably a net positive for the world, but I can't help but feel that it's a fake environment. The photos of beautiful meals, incredible holidays, and the perfect selfie that took hours to get just the right angle... It's not real. There is also the fact that your thinking is never challenged as the algorithms are designed to feed you storeys and information that re-enforce your own thinking - even if it is fake news. Whether you think Trump is an idiot or a hero, there are enough articles out there to support either view, and you will only ever see the ones that are consistent with your own opinion. There is a real skill to using social media effectively and not getting addicted to it or allowing it to have a negative impact on you. Hopefully our children and grandchildren will develop and hone this skill better than previous generations - we need make that a priority for the sake of their mental wellbeing. You may wonder what my rant about social media has to do with investing. Well, a similar pattern of increased use has occurred with online trading platforms around the world. An online trading platform is an app that allows you to buy and sell shares listed on stock exchanges around the world at the click of a button. The most well known one is Robinhood in America, and New Zealand has a smaller scale version called Sharesies. Sharesies has been operating in New Zealand since 2017, and in its first 3 years it accumulated about 90,000 customers. However, since Covid they nearly doubled their customers to 166,000. That's incredible growth in a very short period of time. In the month of April, the average number of daily trades on the New Zealand stock exchange increase exponentially - a big portion of this directly attributable to Sharesies customers. There is even anecdotal speculation that this spike in activity is attributable to the fact that there was no live sport to bet on, so attention was diverted from TAB accounts to Sharesies accounts. The average Sharesies customer account balance is $3,000, and the average TAB customer account losses $680 a year - similar metrics. Some professional investors are concerned that this high volume of "retail trading" is artificially inflating the value of some shares. Now don't get me wrong - I'm not having a go at online trading platforms like Sharesies, or their customers. In fact, I think these are great companies doing great things. And just like social media, I think that on balance companies like Sharesies are a net positive for the world. If it is engaging people in saving and investing, it has to be a good thing. However, I also think that just like social media, there is a real skill to using these platforms effectively and not getting addicted to them or allowing them to have a negative impact on you. Know the rules of engagement, understand the risks, and apply all the same common sense rules you would to any other investment. Scott Galloway writes an incredibly interesting article on this subject which you can read here. Calculating the value of a company listed on a stock exchange is a skill that professional fund managers study and learn over decades. It is not easy. It would be careless to think that you or I can do a better job of it by dabbling a bit in our spare time. But that's not to say that we shouldn't have a punt here and there if you have an appetite to. Just be sensible. Read, observe, educate yourself, form an opinion, and invest. But just like your TAB account, only play with money you can afford to lose. It might seem very easy to make money when the markets are being kind, but always remember that markets can also turn cruel very quickly. The past month has seen continued strong performance from share markets around the world, with most major markets advancing 1% and 6%. Share markets are still down from their peeks of February this year, but have clawed back a significant portion of the initial 30% fall. Most share markets are now down between 3% and 10% from their February highs, with Australia and London being the exceptions still down 16% and 18% respectively. House prices continued to advance slightly over the past month, defying, for the time being, all the predictions of declining prices. Here are the numbers: |
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In terms of your Select Wealth Management portfolio, the performance reports for the June quarter are now completed. If you are registered for the online portal, then you can now log in to see this information. If you receive your report by email, this will be emailed to you today, and if you receive your report in the mail, these will be leaving the mail house shortly. I am pleased to report that the June quarter enjoyed strong performance, and regained most of the losses incurred in the March quarter. If you have any questions about your report or would like to meet to review your portfolio, please do not hesitate to contact me - I am here to help. Finally, a quick update on our Giving Back program. Having extended the program for Birthright Kapiti to the end of 2020, we are confident that we will be able to reach our target of $2,500 for them. Thank you for your continued support and the referrals of your friends, family and colleagues - they are greatly appreciated. You can follow progress of the campaign at https://mifinancialplanning.co.nz/giving-back.html Until next time, keep safe. 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.