| Welcome to the November issue of the Dashboard Newsletter. I learned a really interesting fact about the bikini this week. And given that we are close to the end of the year and summer holidays, and we are finally seeing glimpses of the summer weather, I thought this would be a suitable topic for this month's newsletter. "What has a bikini got to do with investing" I hear you ask. Well, not a lot really. But there are some common threads that I find interesting, and which fuel my optimism.
During World War II, the world was in short supply of everything - food, gasoline, shoes, coffee, clothing. All supplies were going to the war effort, leaving little for the general public. The US army produced over 100 million uniforms to supply to allies, which left little material for civilians. It got worse in 1943 when the Army mandated that the synthetic material typically used in bathing suits had to be reserved for making military parachutes. Given the shortage of material, clothing companies got creative and started designing bathing suits with less and less material. A designer named Louis Réard took this to the extreme and designed a bathing suit with as little fabric as possible - a mere 30 inches. And hence the birth of the bikini in 1946. When deciding what to call it, he read in a newspaper about nuclear bomb tests that were taking place on a thin strip of rocks in the Pacific and were catching the public's attention. A thin strip catching people's attention? That's exactly what Réard was trying to do too. So he named his swimsuit after the atoll where the nuclear tests were taking place - Bikini. Aside from the story just being interesting, what I love most about it is the validation of the saying "Necessity is the mother of all invention". This is one of the reasons that I always remain optimistic - particularly from an investment perspective. Yes, we live in a very uncertain world at the moment - geopolitical tension, high inflation, climate change, house price falls, Covid, the list goes on. But history has taught us that human beings are extremely adaptable and creative. Today's challenges are the catalysts for tomorrow's solutions. (This is particularly relevant to the climate change challenge). I believe that the world will innovate and find solutions to our current challenges - that's what has been happening since the beginning of time. And in doing so, this will create enormous investment opportunity. A company like Tesla born from the need to solve the problem of emissions created by internal combustion engines - and look what happened to its share price over the past decade. Right now, there are hundreds of companies just like Tesla working on great products and solutions that will change the world in the future - just the same as Paracetamol did in the 1800's, General Motors did in the 1900's, and Apple did in the 2000's. Imagine owning shares in these companies... As investors, we have the opportunity to do exactly that. Despite the dreadful returns from most investments over the past year, it's worth reminding ourselves that investment opportunities will always be plentiful. We just need to be deliberate and patient in seeking them out. In terms of the markets, the past month has seen a very strong rebound. Share markets are up between 4% (Hong Kong and New Zealand) and a whopping 16% (America and Germany). This big rebound has been driven mainly by the fact that there are early signs that inflation has peaked, and that central banks around the world may "pivot" and not raise interest rates as aggressively moving forward. Partly off-setting the strong share market performance has been the strength in the NZ dollar - increasing against all major trading currencies (by as much as 8% against the US$). Mortgage rates in New Zealand continue to eek up with the 1 year rate now touching 6% across most major banks. This directly feeds into house prices, which continue to fall. Here are the numbers for the past 30 days: |
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In terms of your Select Wealth Management portfolio, there is not a great deal to report this month. We continue to meet with our researchers JMI Wealth, as well as all of the fund managers, to monitor progress. Fixed interest continues to look attractive with yields on New Zealand corporate bonds between 5% and 6%. It's been said that "a portfolio is like a bar of soap - the more you handle it, the smaller it gets". This is particularly relevant right now, evidenced with big moves in the market (both up and down) on a daily basis. The S&P500 jumped 7% in 2 trading days last week - miss these days and you miss the equivalent of a year's return. Right now, a steady temperament remains paramount. Finally, a quick update on our Giving Back program with Kaibosh. Unfortunately we aren't going to reach our target of $2,500 this time. It'll only be the second time that we have missed our target since we started this initiative 7 years ago. But we are still proud to be able to make a contribution to this great cause, and hope to get close to $1,250. To keep track of the Giving Back program visit https://mifinancialplanning.co.nz/giving-back.html As always, thank you for your continued support by introducing friends, family and colleagues to our business as prospective clients - I really appreciate it. Warm regards Dave and the team at Makowem & 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.