| Welcome to the October issue of the Select Wealth Management Dashboard Newsletter. Don't you hate wearing a mask? I do. It's uncomfortable. And gross. And when I'm talking to people, I find it really difficult to fully understand them without seeing their facial expressions. But as much as I hate it, I wear my mask when I'm out in public. You just have to. And it's the same with vaccination. I typically don't like taking medicine unless I really have to - not even Panadol. So injecting a relatively untested substance into my body doesn't sit particularly well with me. But I did it. It beats the alternative - not getting vaccinated... Right?
COVID has been dominating our lives for over 18 months now. I have deliberately not written about it in my newsletters much, because there is already an overload of COVID news out there. And by its very nature, it tends to be negative (which adds no value) and almost irrelevant (because we can't change it). Besides which, I certainly don't know enough about the subject to comment with any authority. (I would argue most so-called commentators on the matter don't). But I have been thinking about it a bit lately... Napoleon's definition of a military genius was "The man who can do the average thing when everyone else around him is losing his mind." What he meant, I think, is that most wars are lost, rather than won. The final outcome is driven more by one side's blunder than the other's brilliance. One screw up can overwhelm a dozen smart decisions that preceded it. Being "average" at critical times can sometimes win you the war - or at least avoid you losing it. This principal can be applied to most things (certainly investing), and probably to our current COVID situation too. We don't have to "win" against this thing. We just need to be practical and ensure we don't "lose" against it. There seems to be such extreme views on the matter. Lockdown vs no lockdown. Elimination vs non-elimination. Pro-vax vs anti-vax. It's polarising and unhealthy. I can't help but feel that now is a time that calls for "average" behaviour. We've been trying to "win" against COVID for too long. And I'm not sure that we even know what "winning" looks like. The only measure to date has been case numbers and death rates. (Ironically, deaths rates in New Zealand were down 5% in 2020 compared to 2019 - a common trend around the world. Which seems odd in a health pandemic). Obviously these rates are critical, and we have to continue to measure them, but surely there are other metrics that need to be considered too? What about other health consequences like the number of cancer diagnostic procedures being missed, or the number of urgent surgeries being deferred. Or the social consequences like the development being missed from early childhood centres being closed, families being separated from each other, and the social divisions starting to form because of differing views on COVID. The International Monetary Fund (IMF) released a report this month forecasting global growth in which they list the risks which they consider to be most relevant to global growth right now. Among them are the usual suspects - subdued employment growth, rising inflation, food insecurity and climate change. But for the first time that I can recall, they included "the setback to human capital accumulation" as a significant risk - so serious is this issue. Then the obvious financial consequences like the debt being accumulated that our kids and grandkids will need to repay, and the small (and not so small) businesses closing their doors permanently. Perhaps some of these metrics don't seem as pressing and are a bit harder to measure than case numbers and deaths, but they are no less important. As an Investment Adviser, I spend a lot of my time considering risk and how to manage it. Often the perception is that all risk is bad. But the fact is that risk, if understood and managed well, is what delivers good returns. Sometimes you need to take some managed, well considered risk. Up until now, we have managed the COVID risk exceptionally well. But I think we need to start shifting our thinking to resuming our "average" behaviour and activities again. And this involves some risk. But I encourage you to embrace this risk. Get your jab, wear your mask, be smart about where you go, what you do, and how you do it. Take personal responsibility. But shake off the fear and prepare to resume a normal life soon. If we can't do this collectively as a nation, I fear we might lose the war. In terms of the markets, the past month has been volatile. After a strong run, the last 2 weeks in September saw most share markets fall significantly. They have recovered a bit in the first few weeks of October, but are still down between 1.5% and 3.5% over the past month - Japan's Nekkei was down a painful 7%. For a New Zealand investor, negative returns were partly off-set by a falling NZ$ - a small silver lining. Mortgage rates continue to creep up with a 1 year rate closing in on the 3% threshold. Here are the numbers for the past 30 days: |
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In terms of your Select Wealth Management portfolio, you will be receiving your performance reports for the September quarter over the next few days (if you haven't already received it). Performance for the quarter has not been great, but the longer term numbers (1; 3; 5 and 10 year) are still very good. As always, if you have any questions about your performance report, please do not hesitate to contact me - I am here to help. Finally, a quick update on our Giving Back program. Thanks to your wonderful support and generous referrals, I am pleased to say that our campaign for Leukaemia and Blood Cancer New Zealand is on track to being one of our most successful campaigns since we started the program in 2016. It's great to be able to support this awesome cause. You can follow the progress of our campaign at https://mifinancialplanning.co.nz/giving-back.html As always, thank you for your continued support and referrals of friends and colleagues that makes this program possible. 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.