| Welcome to the June issue of the Select Wealth Management Dashboard Newsletter. Much has happened since last I wrote, so I’ll rip straight in.
The key event in New Zealand over the past month was the delivery of Grant Robertson’s first Labour Government budget. I won’t dwell too much on this, as there were no unexpected surprises in there. It was a typical Labour budget (more spending and a higher tax take), but in my opinion a reasonable and balanced first effort. Key points of note:
As I said, nothing unexpected in there, and on balance a well-considered and balanced budget. The wild card (as always) is whether New Zealand Inc. can grow at 3% per annum for the next 5 years… The other main event over the past month was the “Trump – Kim” summit. I can’t help but chuckle at the irony that Trump – the man everyone feared would push the red button – has in fact made a significant breakthrough in essentially disconnecting North Korea’s red button. It is of course very early days, and this could still all amount to nothing, but the early signs are promising. Trump and Kim both signed a document (a “Letter of Intent”) outlining some basic objectives. The main points were:
Love him or hate him, you can’t deny that Trump has set out some admirable objectives that, if achieved, will not only benefit the people of America long term, but will significantly impact the people of North Korea in a positive way. The rest of the Asian region (and world for that matter) will also be better off for it – it is a significant step in a positive direction. A quick note on interest rates. The FMOC are meeting as I write to review the “Fed Rate” – America’s equivalent of the New Zealand’s Official Cash Rate (OCR). The FED rate is currently 1.75%, and it is unanimously expected to increase to 2% at this meeting. If this does happen, it will be the first time in over 20 years that the USA Fed rate (2%) will be higher than the New Zealand OCR (1.75%). This isn’t something of significant or fundamental importance - it is more a point of interest for me. I am encouraged that the USA are “normalising” their interest rate policy. I also feel that there is still the possibility that the US$ will strengthen against the NZ$ as a result of this. For the first time in 20 years, global investors can get a better interest rate by investing in US dollars as opposed to NZ dollars. In theory this should result in lower demand for NZ dollars. I’ll watch with interest over the course of the next year or so… Investment Advisers spend their lives constantly looking for threats and opportunities in investment markets. They are continually trying to pick the next trend – a signal for when to “get in” and when to “get out”. My observation over the past 20 years is that it is virtually impossible to “pick the market” with any consistency. Ask Warren Buffet, and he will simply tell you to “buy the shares of a company that you believe will still be there in 20 years’ time, and then wait 20 years…” He never jumps in or out, he just holds good companies. Picking the market is a dangerous game. Carl Richards sums it up perfectly in this sketch: 
This morning I got the following email from a client: I have noticed that my Superannuation isn't growing as fast as it could - given during the GFC I requested that you change my risk profile and direct my contributions into cash based funds. I am keen to talk to you about reinstating my original fund allocations. If only I had a dollar for every time I saw an email like this… This client “jumped out” at the end of the GFC (right at the bottom of the market almost to the day), and is now considering “jumping back in”. It’s a mistake I am continually trying to help clients avoid. To me this email is as reliable as any other “signal” that we are near the top of the market… Here are the numbers for the past 30 days: |
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In terms of your Select Wealth Management portfolio, there have been no material changes over the past 30 days. Performance has been strong over the past couple of months, and there has been some fine tuning of portfolios as we continue to take profit and move towards a slightly more conservative position. Aside from these minor tweaks, it is business as usual. We are starting a new “Giving Back” program for the second half of 2018 which I will tell you all about next month. We have a couple of weeks left of Warwick’s campaign, and I am pleased to confirm that we will reach our target of $2,500. Warwick is currently in Russia having his stem cell treatment, and he sent a lovely email a couple of days ago with an update. Whilst the treatment sounds horrendously uncomfortable, I am pleased to report that it has all gone according to plan and Warwick is now in recovery. Thinking of you Warwick, and wishing you a very speedy recovery!! You can follow progress at www.mifinancialplanning.co.nz/giving-back.html . To finish, a bit of World Cup Football humour… 
Until next time, keep warm and well. 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.