Michael's Musings in East Perth, Western Australia | Financial service

Michael's Musings

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25.01.2022 I cannot write "don't move to cash now unless you need funds in the short term". That could be deemed "personal financial advice", and such advice can only be delivered via a written document called a Statement of Advice. It costs my business around $3,000 of my time to create such a document. When people cannot get advice, they make decisions based on what they read or see or hear. Generally from uninformed or misinformed or simply non-applicable sources. At this Facebook pa...ge is solely "general advice" and cannot be used as a basis for decisions, all i can say is that I would strongly suggest that people seek professional advice before making changes to their super fund mix of investments. You *might* make a change that works to your advantage, but based on anecdotal evidence of how people are reacting to the Caronavirus outcomes, it would appear that many people are simply reacting, and are oblivious to potential outcomes. https://www.professionalplanner.com.au//sunsuper-sees-ove/

25.01.2022 10 criticisms of ultra-low interest rates.. The linked article covers 10 very important issues that are encountered when Central Banks reduce interest rates to nil or even negative territory. One area not covered in the article, is the impact on currencies. Money "printing" will generally reduce the relative value of the country's currency. This makes their exports more competitive, which can create friction politically.... The problem with falling currencies is that it can trigger an (albeit cloaked) currency war - with countries debasing their currency further and further in an effort to stay competitive globally. It's a race-to-the-bottom, and one with random after-effects and impacts. While few commentators or analysts see rising interest rates as an issue now or even into the foreseeable future, the impacts of currency can be a wild-card in any forecasting model. Tomorrow the RBA will tell us whether it will reduce interest rates closer to zero. It will also tell us whether it will embark on further "Quantitative Easing" or QE. For most people, QE is just a quaint acronym. However, it is a very real release of vast sums of cash into the financial system. Just what this cash will do, and how it will impact our futures, are unknowns. It's a good time to be watchful of your exposures to risk and risky assets. https://www.livewiremarkets.com//super-low-interest-rates-

25.01.2022 The AFR link in this post talks about Bitcoin and the "mining" of Bitcoin tokens. The creation of Bitcoins is currently requiring the equivalent of New Zealand's energy consumption, and that consumption is expected to double in only a few years. Disruption always comes at a cost.

25.01.2022 How long can a rally, rally? The Covid-19 impact on economies has been huge. Massive unemployment and business dislocation. The lifting of lockdowns is definitely positive for economies and the businesses operating in them - but is a beginning enough? Sharemarkets have lifted from the depths of March's low-points. Have prices lifted too far, when so much remains uncertain?... These questions are keeping many in the financial world awake at night. The linked article covers some interesting underlying themes of this recovery. It seems that the USA recovery is powered (at least in part) by short-sellers buying back shares to close out their positions. If this is the case then is would be reasonable to assume any such buying would be about done by now. If this is the case then further lifts in markets would require good ol' profits and growth of earnings. If all of this is a worry to you then it might be time to reconsider your strategy. Much of these news articles are covering the "noise" of markets. The standard ebb and flow that is entirely unpredictable. If your strategy is dependent on getting the movement in and out of markets absolutely correct then you are in for a torrid time. Even the best of professional investors are wrong much of the time. An investment strategy that allows you to sleep at night is the most appropriate. Working out just what that might be for you, is the objective of any strategy. The 2020 calendar year is certainly developing into a difficult and interesting time to be investing! https://www.livewiremarkets.com//abc-of-equities-recovery-

24.01.2022 How do you choose between different investment options? What a simple question. The answer is anything but simple. Much of the answer is based on who you ask and their knowledge, experience or background. If you don't ask anyone else then it's clearly going to be based on your own knowledge, experience or background. You may have good role models around you. You may not. Most of the answer to this question is going to be worked out simply by virtue of who you ask - yourself ...or anyone else. Many financial planners are required to sell one product or another in order to solve client financial issues. This can make it a very simple answer. You just buy whatever they usually sell or provide for that problem. Here's an example... Robert Baggins wants to change the investment strategy of his super account. He's with a fund that offers 8 investment options. He wonders whether he should look at another fund, because he thinks that fees may be high where his money currently is. If he were to ask his super fund, the answer would be to look at his "risk profile" and work out how much risk he is willing to put up with, and then to recommend a conservative/balanced/growth option. Then again, the super fund may have a more comprehensive questionnaire and ask about Responsible Investment. Robert's always wanted to put more support into sustainability, governance and ethical considerations, so he may be recommended to the ESG option. If Robert asks his good friend Frodo, he may choose to ask Frodo's Financial Planner, who makes appropriate investigation and decides Robert would be best suited to a tailored managed portfolio of shares and property securities. Frodo might ask his bank relationship manager, who says he cannot recommend super funds but he is sure Robert would qualify for an investment loan if he wanted to buy a property and earn some good long term income? Here's a slightly different approach. What if we were to ask Robert how much monthly income he's expecting from his super fund when he retires? Is the money he has in super today, plus new money and less costs, likely to provide that income? If not, where is Robert going to get the extra money from to live the retirement life he is planning on? Sometimes - and it really is only sometimes - I encounter people who will meet their financial objectives regardless of where they invest their money ( excluding fire, sword and Armageddon-style events). Most of the time however, every decision will lead to a need to balance outcomes - risk against return, income against growth, tax-effectiveness versus simplicity. The list goes on and on. In my experience, the simple question of "where should I invest my money" is best answered by answering a host of other questions first. Quite often, where and how to invest that money becomes much less of an issue.

23.01.2022 How are super funds doing right now? The answers to that question are wide and varied. Each fund will show different levels of return. The return can be impacted by a range of issues but most of all, it will be impacted by the mix of "defensive" assets (cash, fixed income) and "growth assets" (businesses, shares, property). Aside from exposure to secure or risky assets, the price of those assets may be linked to fast or slow valuation methods. Think of this as being similar t...Continue reading

23.01.2022 What a good article this is! John Wasilev answering a self-managed super fund investor's question on which newsletter to choose for help with share investing. John points out that he hasn't been able to track down any studies that compare newsletters. Why not, he asks?... Good question, isn't it?

23.01.2022 The RBA today decided to leave official target interest rates at 0.25%, where they have been since the February decision reduced them from March this year. It's hard to believe that rates can be this low - only a year ago they were 1%, which already seemed low. The RBA decision notes highlight the Covid-impacts and compares the conditions to those of the 1930's. That's not a pleasant comparison. However, the RBA does see some positive future so all is not doom and gloom.... The problem that governments and policy decision makers have, is that these low rates are supposed to stimulate investment and boost employment. At some stage, interest rates become so low that further reductions have less and less effect on confidence and economic growth. As per my previous posts, this is a good time to check your exposures to defensive and growth assets. It's also a good time to marshal your resources and make sure your reserves are safe and accessible. https://www.rba.gov.au/media-releases/2020/mr-20-18.html

23.01.2022 Life at the top is not always comfortable.. When you hear that a property sold for $40 million they you expect that someone, somewhere, has just made an awful lot of money... But when you find out that the sellers paid $67.7 million when they bought the property. you realise that maybe having more money doesn't always mean you can make more money or that your deals are always better.... On the other hand, the article suggests the sellers and the buyers are related, which could be hinting at a bit of capital gains tax work going on... perhaps the owners had made a huge gain on the sharemarket, and wanted to show an offsetting capital loss? Regardless, it's a bit of a peak into the world of the 1%. https://www.afr.com//massive-apartment-on-billionaires-row

23.01.2022 Time to check your finances... When strange things happen, it's time to glance over your financial position, to see how well you might weather any storms hidden over the horizon. Covid-19 and all these strange lock-downs, border-controls, and massive global social unrest are all strange enough in themselves, but the investment world figures are getting even stranger again. Here's the opening paragraph from an industry newsletter ... "Numbers are getting extreme again in marke...ts. We had the local CPI print for the June quarter yesterday, which at -0.3% year on year was the lowest inflation read for 72 years. On Monday the Government issued the longest maturity bond ever, getting $36.8bn of orders for a 30 year 2051 maturity at a yield of just 1.95%, and this week the US has been debating that $1 trillion is not enough for the second round of stimulus to prop up its economy (in the face of weekly new jobless claims rising again for the first time since the initial spike, at 1.416m for the week). The prospects of a second wave in Australia are very real with State borders being closed again, and yet asset prices are powering along. Interest rates seem to get ever lower, with the RBAs term deposit index now well below 1%." None of this was unexpected. What was unexpected was the V -shaped recovery in markets. Most professional investors expected markets to take some time to digest the implications of depression-level unemployment and huge structural hits to the global financial system. Yet investment markets have bolted skywards from the depths of the Covid markets falls. Perhaps the bulls are right, and the effects of Covid will be short-term and easily navigated. But what if they are not? There's no answer to this question in my post today. I'm merely stating the obvious, and suggesting that when the obvious is in front of you, it's a reasonable position to do something about it.

22.01.2022 Stock market bubble or business of the future? Companies that are exposed to, and capable of delivering to, the online buying community, have done particularly well during the Covid-era. Here's an excerpt from an article in today's Australian Financial Review, "E-commerce retailers put on epic bubble watch", by... Tom Richardson... "The problem is sharemarket bubbles are normally hidden in plain sight, as they form when popular consensus meets a fear of missing out. Dissenters disappear or are dismissed given the weight of opinion. In Australia the e-commerce sector has exploded since the market's March 23 low, with stocks like Afterpay up 12-fold, Kogan up six-fold, Redbubble up 12-fold, Marley Spoon up 14-fold, and Temple & Webster up nine-fold." While some companies have done spectacularly well, others have fallen by the wayside or struggled to cope in a very difficult set of circumstances. From an investment point of view, the question is not what past performance has been. Investment requires peering into the future, and trying to determine if how an investment will perform across the range of possible future outcomes. It's a tricky business. At what stage should an investor sell part or all of their holdings in an investment they've just made 10x their capital from? Should they keep it all in the hope that business conditions continue to favour their particular investment? There is no simple answer to those questions. Investment is part science, part art and part random chance. Anyone suggesting otherwise is generally trying to sell a particular approach. One possible part of the answer is to fall back on the original strategy that led to the purchase. If there was no strategy, then luck probably played just as big a role as research in the original purchase. If there was a strategy, what was the plan for a hugely successful investment? These may seem rather strange questions and lines-of-thought, but they are standard bread-and-butter for people who manage money on a regular basis. For anyone who has made a huge return in a short time period in recent times, it would be good to spend time revisiting some of the basics, to help increase the chances of keeping some or all of that good fortune. Please remember the Great Disclaimer - nothing in this post is to be taken as personal financial advice. You must not take action based on the content of this post, as it is general advice only, and may not be appropriate to your situation and may not relate to your best interests.

22.01.2022 Who has the biggest package? It seems that governments are finally addressing the scale of loss and destruction of income that Caronavirus lockdown measures are creating. The Australian Government has today announced a third set of stimulus support to try to keep Australian workers employed - and to ensure that sufficient money is flowing to (hopefully) keep small and large businesses around for any potential recovery.... The cost of this package is estimated at $130bn but most importantly, the dollars amount to $1,500 a fortnight for at least 6 months (I would imagine subject to the rolling changes in circumstances between now and then). https://au.finance.yahoo.com//government-fires-70-billion-

22.01.2022 Government response supporting Individuals and Households. https://treasury.gov.au/coronavirus/households

21.01.2022 When logic is defied by reality... CSL is a brilliant company that offers essential products to global markets, while competent management run the business operations in a way that is admired by peers and analysts. Yet for most of the time that I can readily recall, CSL has been seen as "expensive" and "overpriced". In this recent Caronavirus turmoil, CSL's shareprice has fallen far less than the marketplace, and any hint of a recovery sees the price rise again. ... This company is a great example of what investing is as much art as it is science. By academic measures, CSL is overpriced. Yet anyone who bought shares years ago, has made a lot of money. So here is an analyst/commentator who is prepared to say that the current pricing of CSL is "nuts". I'm not going to a make any call on this. Buying *any* single company involves a heightened "selection risk" and putting too much of your total portfolio in one securty increases your concentration risks. The Great Disclaimer Any decision to buy any security should be done from your personal perspective of financial position; financial capacity to wear the risk; emotional capacity to cope with the risk; the tax outcomes, income perspectives, social security impacts and reserves impact. There's more than that but those are the minimum areas you would want someone else to look at or for you to research yourself - should you be comfortable with your own knowledge, experience and training. https://www.livewiremarkets.com//completely-nuts-csl-s-dis

21.01.2022 Covid-19 lockdowns, freedom and economics.. It's a heady mix. I have linked to an article from fund manager Magellan. In it, questions are asked about the ethics behind government responses to the virus, and starts to tackle the difficult question of how to/where you should, attempt to place a value on a human life.

21.01.2022 Another day, another scammer. "Steve" from the claims department called me today. Australia's regulators are sitting on their hands, spending hundreds of millions of dollars to make us all fill out more useless forms, while these criminals are left to prey on the unwary and vulnerable.... It's disgusting. If you hear from Steve at the claims department, please ignore him. If you get an hour free, try to work out how to report him and his cohorts' activities. You'll find it difficult and frustrating, which shows how much care and attention Australia's regulators are giving this aspect of the financial world. If I sound angry, it's because I am. https://www.reverseaustralia.com/lookup/0862053579/

21.01.2022 A great update on possible economic outcomes from Shane Oliver, a well-respected Economist at AMP Capital. https://www.livewiremarkets.com//is-coronavirus-driving-a-

21.01.2022 How much debt is enough debt? 2020 will certainly go into the record books as a difficult year for global debt markets. The linked article highlights just how big 2020 has been.. "Companies in Janus Hendersons corporate debt index, which comprises the 900 largest non-financials in the world, owe 37 per cent more than they did in 2014 and rising debt has comfortably outstripped growth in profits. The most indebted company in the world is Volkswagen, with a debt of $278 b...illion that approaches the level of debt owed by South Africa or Hungary." Obviously, Volkswagon could not borrow so much unless it was wroth an awful lot more than its debt. Yet the simple fact that one company owes that level of money shows just how big an impact the failure of any of the very large companies would be on global markets. Debt itself is not necessarily a bad thing. If the amount is proportionate to assets, and if creditors are happy holding the debt and the borrower is comfortable paying it back then everyone is doing well. If any of those become an issue then the impact can be large. As the article suggests, this may be a time to be more than usually careful of debt. https://www.investordaily.com.au//47436-corporate-debt-sky

20.01.2022 I have a great investment idea for you! That's the call of many newsletter and investment publishers, who spruik the next Big Thing. Just how good are people at forecasting into the future? Ever wondered? ... The article in this link covers a series of research studies into human forecasting. The end result - don't bet on it.. https://www.firstlinks.com.au/investment-forecasts-foresigh

20.01.2022 Pay off the home loan or pay money into super? It's a big question. The ideal is clearly to have enough spare cash to do both. Most won't have that option, so there is always an argument over which is better. I've linked this post to an article from Peter Switzer's newsletter, where the economist/journalist makes some fairly strong points in favour of one option over the other, depending on the age of the person making the decision....Continue reading

20.01.2022 Link to government website for economic responses to the Caronavirus. This page includes the help being provided to individuals, households and business. https://treasury.gov.au/coronavirus

19.01.2022 Don't let anyone tell you the future is certain. Inflation may or may not be with us in the next market cycle. No matter how strong the authority, how good the research, how clever the delivery or prior track records... the future remains uncertain. Therefore, any attempt to look into the future is by definition, going to be dealing with uncertainty....Continue reading

19.01.2022 How did lying become defensible? When did the "reasonable person" concept become this distorted? Has anyone else noticed the strange defenses being mounted in legitimate and important court cases recently? First we read that one of Donald Trump's more vocal lawyers peddling the "stolen election" stories, is now suggesting to courts that her comments can't be held against her because no sensible person would believe them to be true..... Here's an excerpt from the story.. "Ex-Trump attorney Sidney Powell's weekslong campaign to invalidate the results of the 2020 election was not based in fact, her lawyers said Monday. No reasonable person would conclude that the statements were truly statements of fact, Powell's attorneys said in a court filing defending her against a billion-dollar defamation lawsuit from Dominion Voting Systems, the manufacturer of the election equipment she claimed was involved in the conspiracy to steal the election. Powell, who for a time was part of former President Donald Trump's legal team fighting the election results, repeatedly and baselessly claimed that votes were illegally switched on Dominion voting machines. Election experts and officials, as well as top law enforcement officials, have said the 2020 election results were accurate and there is no evidence of widespread voter fraud in the U.S." Gosh. So if I lie, and my lie is possibly not true - then you can't sue me because everybody knew I was lying... Gosh again. And to show that this isn't just a single example of the concept of saying it's ok to lie - especially when even you don't believe the lie - we have the massive global investment banking firm Goldman Sachs arguing a similar line in US courts recently... The following paragraph is extracted from the New York Times "Dealbook" newsletter for Monday 29th March 2021: "The Supreme Court will hear arguments today from Goldman Sachs and from pension funds over a claim that the Wall Street giant misled investors about its work selling complex debt investments in the prelude to the 2008 financial crisis. In its latest brief, Goldman makes an interesting argument: Investors shouldn’t rely on statements such as honesty is at the heart of our business or our clients’ interests always come first that appear in S.E.C. filings and annual reports." Can you believe that? I can't. A global bank is arguing you should not believe it when it says it is honest or that they put clients interests first. Financial planners, like most professionals, must meet extremely strict concepts of honesty, truth and acting in the best interests of their clients. I have to ask the question.. When did it become even remotely plausible to argue that honesty shouldn't be a basic assumption in commerce and professional conduct? Strange times. https://www.theguardian.com//sidney-powell-trump-election-

19.01.2022 Every market fall is different, so it can be simplistic to point to previous falls and recoveries as likely after our recent Covid-19 induced share market falls. Keeping that warning in mind, the article below provides some interesting examples of how various market crashes have played out in subsequent years. Sharemarket investments are considered 'long-term', but it is hard to pinpoint just how long 'long-term' actually is.The article covers 10 year returns and suggests t...his has been sufficient to ensure a positive return in the past. Again, please use care in making any assumption from this. The 1970's involved a crash and recovery, followed by another crash. It is quite possible that even 10 year returns can be negative. https://spotlight.morningstarhub.com.au/six-simple-charts-/

17.01.2022 ESG - Responsible Investment. It's a minefield. You'd think it would be the easiest thing to do - just pick good companies, right? And for those that you don't know about, just find the best research and use that. Except it really is not that easy. Even the phrases are not universally accepted in terms of a single definition, so it's very hard to identify investments that align perfectly with each of our individual ideas and thoughts and preferences.... ESG - Environmental, Societal and Governance issues. All of which are Responsible Investment criteria. But there may be more. You may want to invest in those companies and sectors that positively impact those areas or you may simply be looking to avoid those that have a negative impact. You then need more definitions. Many ESG/Responsible investment "filters" are based on a maximum exposure to any one or more such filters. That works fine if the companies are small, and it caters for those immaterial, side impacts that may unfairly impact a particular company or sector. Yet for large companies, it leaves a very wide range for error. If your maximum exposure is 10% of income (not unusual as a filter) then how about companies with $100 billion of income? that would mean they could have $10 billion a year of exposure to those areas you don't want. The attached article provides a fund manager's thoughts on Responsible Investment. It's always good to get a range of thoughts and ideas before embarking down a particular pathway of investment. Responsible Investment is in its relative infancy - which would suggest even more care should be taken. [photo attribution : Photo by RawFilm on Unsplash]

17.01.2022 How did economies recover from the 1918 pandemic? Good question. The linked article illustrates just how important government policy was to the impact felt by different nations. Well worth a read.

17.01.2022 A race you can’t afford to not be part of... How is the average Australian impacted, when our Reserve Bank enters the global money-printing race? Firstly, they stop earning any money from their hard-earned cash. Saving money, thrift and going without today, for a better tomorrow, are all trashed as workable concepts....Continue reading

15.01.2022 Is the $US 1.9 trillion stimulus package likely to trigger uncontrollable inflaition? Or is it simply the amount required to help masses of citizens get back on their feet? Perhaps a bit of both? I watch the US 10 year bond rate each day, along with the Australian cousin and the 2 year rate - all because I'm a financial planner and we do that sort of thing. My watching has become ever more intense these last months, as I watch "markets" start to price in interest rate rises f...ar higher than central bankers build into their models. Who will be right? The attached article from the Australian Financial Review highlights the difficulties facing those who make the big global financial decisions. Central bankers in the USA/Australia have committed themselves to near-nil rates for a few years into the future. The interest rates being priced into market-based fixed income investments suggest that those fixed income investors are, on average, seeing the potential for far more inflation into the future than those central banker assumptions. For we mere mortals, it is more a matter of trying to find ways of accommodating such a diverse range of potential outcomes. How can we retain exposure to higher-yielding defensive assets and at the same time protect ourselves from the capital losses than can appear when interest rates move too far, too quickly? The Great Disclaimer Again, these are just musings. Do not act on them for your own portfolios. These are general observations only and must not be taken to be personal financial advice. The general advice that I would pass on quite freely, is to spend time educating yourself on what possible impacts different future scenarios can have on your money. Understanding won't protect you from left-of-field outcomes but it will better prepare you for any such event.

14.01.2022 The GFC was "solved" by presenting enormous sums of public money to the very institutions and individuals that created the GFC. The term used to describe this process was "privatising the profits, nationalising the losses". The result was an increase in disparity of incomes. While those with exposures to investment markets did well, others did not do so well. From the point of view of fairness and social equity, my musings tend to agree with the logic behind the linked article.

14.01.2022 Income Protection Insurance - why has it become so expensive? Income Protection is a fairly simple concept. You pay a premium to receive the comfort of knowing that if you are kept away from work because of accident or sickness then you will continue to receive a regular monthly income. There are lots of if's and but's around this simple premise. For example, most companies will only pay up to a maximum of 75% of your current income. That's based on the simple idea that anyon...Continue reading

14.01.2022 When days are grim, remember your humanity. It helps more than money and government handouts ever could. The photo is a post in a Facebook page set up for the street I live in. We share a great sense of community, and everyone feels more safe, and happier for being part of that community.... Family, friends and neighbours. Money helps, but there are things that money simply does not provide.

12.01.2022 How can a government simply "print money" at will? Surely you can't create money on a whim - it has to be paid back, right? Not really... The Australian Federal Government has a relatively low debt level from a global point of view. Australian households have the bigger debt levels. ... Australian households have to make decisions that best suit their individual needs and wants. That may or may not be best for the economy as a whole. The caronavirus-induced bashing of employment, incomes and security, are national issues. A government can use its enormous capacity to create money, and use all that cash to pump into households. If done prudently, the burden of keeping the economy moving is placed on the lap of the institution best set up to deal with it. The Australian government can fund its expenses at extremely low, extremely long-term rates and levels. This means the government can spend today to keep the economy moving, and assume it will be paid off over a very long time - all at a very low cost and a very low risk. As individuals, we simply cannot take that sort of risk - we have to ask ourselves whether our jobs will still be around, whether we will still earn enough to service any debt, and we will be in serous trouble if inflation spins interest rates higher. Those issues are not as relevant at the national level. The linked article talks through some of the longer term impacts and possibilities for the future after governments around the world have splashed trillions (trillions!) of dollars into their economies. https://www.livewiremarkets.com//the-flood-of-money-and-it

12.01.2022 Today the Reserve Bank of Australia decided to keep its interest rate position, which is : "targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program." The accompanying statement confirms the expectations moving forward, and makes a comment on just how determined the RBA is to keep interest rates low - even if key parameters like employmen...t and wages go above its usual "lift interest rates" triggers... "The Board is committed to maintaining highly supportive monetary conditions until its goals are achieved. The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest." What the RBA is not saying (nor are they denying it), the current policy settings are responsible for : ... taking away the incomes of those trying to live off their savings; for forcing many pensioners and conservative investors to move to riskier investments to try to keep some of their usual income; boosting asset prices and therefore the wealth of those who have exposures to those assets; increasing financial inequality across the nation; rewarding risk-takers and those who take on debt, while punishing those who are saving and shying away from debt. That last paragraph is my own rendition of what is happening. The RBA has made a judgement call that the 2/3rds of the nation who are borrowers, are more important to national prosperity and stability than the 1/3rd who are savers. I'm not suggesting it is right or wrong. It's just a tough call to make, and one that is being made in the face of a currency and trade cold-war. The end result is that Australia is being dragged into the global field of increasing income and wealth inequality. What can the individual do in the face of these massive global and government forces? Stand back, assess their position as coldly and logically as possible, and work out how they can access some of that growth potential, while protecting themselves as best they can from the possible negative outcomes that could follow current policy settings. Ideally, obtain professional financial advice. Then make prudent decisions, based on what is best for the individual.

11.01.2022 Oil at MINUS $37.63 a barrel. Mark that one down in your books. A chance to pick up a barrel of black gold, and be paid to do it. What does this tell us? Does it mean oil is dead as a commodity for the future? Does it mean we will be paid to drive our cars around?... No. None of these - although at some stage, oil will no longer be around in sufficient volume to be the main energy provider for our industries and lifestyles. It's just that the timing for when that is the case, is very difficult to predict. The movement of oil into a negative price is mainly a story about people speculating in oil. Speculators bought contracts for oil, and those contracts were due to expire on the 21st April 2020. That created a bottleneck, and some holders of those contracts were prepared to pay other people to take those contracts off their hands. The details are available all over the internet, so feel free to Google reputable outlets for more information. The Bloomberg reporter Matt Levine wrote a fascinating piece on the oil trader dramas in his 23rd April newsletter. In it, he referred to an earlier Bloomberg report... "The price on the futures contract for West Texas crude that is due to expire Tuesday fell into negative territory -- minus $37.63 a barrel. The reason: with the pandemic bringing the economy to a standstill, there is so much unused oil sloshing around that American energy companies have run out of room to store it. And if theres no place to put the oil, no one wants a crude contract that is about to come due. Underscoring just how acute the concern is over the lack of immediate storage space, the price on the futures contract due a month later settled at $20.43 per barrel. That gap between the two contracts is by far the biggest ever. The May crude oil contract is going out not with a whimper, but a primal scream, said Daniel Yergin, a Pulitzer Prize-winning oil historian and vice chairman of IHS Markit Ltd." And the stories just get curiouser and curiouser... Oil tankers carrying enough crude to satisfy 20% of the worlds daily consumption are gathered off Californias coast with nowhere to go as fuel demand collapses. At least one in 10 supertankers around the world is serving as a floating oil storage facility, Saudi oil officials say. It's a fascinating time to be working in the world of money. https://www.forbes.com//heres-what-negative-oil-prices-r/

09.01.2022 When money doesn't matter... Let's say I own a car, and you want to buy my car. The recommended retail cost of this car brand new is: $34,285.00 drive-away.... You don't want to wait for a new one, so you look on carsales.com.au and decide you are going to buy one second hand. As of Wednesday 3rd January 2021 there are 15 of these cars available for sale in Perth. Here's a list of the cars available. 2013 $20,950 (manual) 2011 $20,998 (manual) 2013 $26,987 (manual) 2020 $50,000 (manual) 2013 $26,990 (manual) 2020 $38,990 (manual) 2013 $18,990 (auto) 2013 $23,990 (manual) 2012 $24,984 (auto) 2012 $22,990 (auto) 2015 $27,990 (manual) 2013 $18,990 (auto) 2015 $21,981 (manual) 2013 $24,990 (auto) 2013 $24,990 (manual) $50,000 for a second-hand version of a $34,285 car? Remember that these second hand prices do not account for the stamp duty payable on the purchase. I've mentioned bubbles a few times in recent posts. I see bubbles all around me. These price and asset bubbles are indicative of pricing mismatches between buyers and sellers. They also suggest you should be careful when making purchases. You could end up spending more than you really should have. In the case of cars - maybe the fun you have in the car makes up the difference. Maybe. Regardless, this is a rather strange time for the world of money. Be careful. Check what you own, what you buy and the prices you *think* something is worth and the prices you would be prepared to sell that same thing for. By the way - the car is the Suzuki Jimny. A 1.5 litre 4x4. Try to find one to buy new in Perth today... the waiting list is 14 months. Is it worthwhile to spend $15,715 (plus stamp duty) for a 14 month wait? You decide. If you have lots of spare money - or if you aren't really thinking about the concepts of price and value - then go ahead. Other than that, I'd suggest this is not a very logical idea. https://www.topgear.com/car-reviews/suzuki/jimny-0 https://www.caradvice.com.au/7188/2019-suzuki-jimny-review/

09.01.2022 The attached link is one of the best articles I have yet encountered on the vexing issue of cryptocurrencies and how they could be looked at in terms of building an investment portfolio. The last 12 months has seen stunning increases in prices for a range of cryptocurrencies. The capitalisation of Bitcoin has reached $1trillion. If it's a bubble, it's certainly a very big one. The article points to the varying uses of Bitcoin and the puzzle of trying to determine some sort of... realistic value to Bitcoin - whether as a currency or as a piece of technology. Either way, it's a fascinating financial world out there. https://www.livewiremarkets.com//how-should-we-think-about

08.01.2022 Environmentally friendly investment has had a long haul in reaching the point where it is genuinely, independently competitive with traditional fossil fuels - but it is getting there. Nuclear power is often suggested as a more environmentally sustainable alternative "base load" provider. In the linked article, even nuclear power is struggling in a climate of reduced consumer demand. It seems that most modern economic systems have a very heavy reliance on growth- rather than s...tagnation or reductions - in demand. What if the caronavirus impacts last far longer than anyone expects? What if genuine social change occurs, with permanent reductions in demand? The area of responsible investment is a fascinating one. I see new Responsible Investment options coming onto the market regularly. It's a great trend, and once these new players get some history and longer term credibility, the results should be fantastic for those people who want to add environmental, social and governance frameworks to their investment decisions.

08.01.2022 The caronavirus-induced falls in sharemarkets around the world caused difficulties for most investors. One area that people had previously considered "safe", turned out to be a lot more volatile that expected. That area was fixed income investments - not all of them, but pooled fixed income investments struggled with the lower liquidity in fixed income markets during this period. The linked article discusses some of the more recent listed investment trusts and companies that ...offered investments in fixed income of one sort or another. Higher income is a great thing to aim for - however, it is always important to keep in mind the security of one's capital. A slightly higher or even a materially higher income may not be appropriate if changes in value or capital are going to impact you negatively. It's a great lesson in portfolio management.

08.01.2022 And adding to my previous post questioning rallies and expectations... Here is a link to an article from Schroders. Schroders are a value manager - which roughly translates into trying to never overpay for any investment. As you would imagine, Schroders are finding current market conditions difficult to understand - to say the least! The article does highlight some of the issues investors need to confront. There is no answer - markets may be too high or they may be too low. T...here is no way of knowing which will be correct until some later date, when we can all sit down with a market history and decide what might have caused whatever happened, to happen. I hope you find it interesting. We are, after all, living in interesting times. https://www.livewiremarkets.com//social-distancing-in-the-

08.01.2022 Please be very, very careful of investment scams. They are persistent, they are good at fooling us all, and they are taking large amounts of money off people at all walks of life. The linked report covers earlier reports - the latest reports suggest that scams are even more prevalent during the Covid-19 lockdowns. Many new investors have started their investment accounts during this time, and some are being lured to areas that even professionals baulk at entering without extr...eme caution. Forex trading is a prime example. CFD trading is another. Most traders lose money. Many lose all their money - but for all of that, they are at least making their own decisions in real markets.. even if they don't understand those markets. Many of the scams though, aren't even dealing in markets. They are just scams, and they will steal your money and anything else they can get their hands on. If you hear a friend or a friend of a friend start talking about such things, please refer them to the ASIC website Moneysmart or www.asic.gov.au directly.

07.01.2022 How many of us can predict the future? That's about how many people can tell you anything about the short term movement of sharemarkets with anything like authority. I keep encountering notes and articles suggesting that the market has further to fall or that the unknown unknowns are so big that there's a chance the entire financial system might fail.... I view all of these with a very healthy dose of cynicism. IF the financial system fails, you and I, dear reader, are going to be standing in foodlines, and we'll have to cope with whatever post apocalyptic scenario rolls over us. There's always a chance that such an event can occur. It's just extremely unlikely. IF you are worrying about such an outcome, I doubt there is much you can do to avoid the conditions that would follow. The very big unknown at the moment is just how our economies will recover from the lock-downs associated with tackling the Carona virus and the resultant Covid-19 disease. IF the lockdowns are successful in reducing the spread of the disease then it is possible that the engine rooms of the economy can get back into action. Whether that is enough to stop a massive loss of jobs and incomes is a very big question. IF the lockdown is successful and IF the economy kicks back into operation and IF government steps to help small business, casual workers and those from the "gig economy", actually work... THEN investment markets are likely to recover quite well. If any of those IF's are not present then any recovery is likely to be slower and longer. So whether you should be buying today is more a question of whether you have money sufficiently "free and available" that you can afford the risk of being wrong, and being wrong for long enough that the outcome does not impact your lifestyle or basic living needs. Please try to ignore broad-based buy/sell calls, and focus on your own personal, specific financial position (I am quite aware that i've just used a series of redundant clauses, but the point needs to be emphasised - look to your own position before putting any faith in broad commentary). The Great Disclaimer Right now, I think personal financial advice would help a lot of Australians. If you cannot get personal financial advice, please undertake a lot of research before making big financial decisions. Ideally, speak with experts, and try to ignore the daily news run of gloom, doom, plunges and spikes.

06.01.2022 Here's a link to a slightly more positive view on the coming year/s. The author suggests there is an increased chance of rising inflation, but also suggests that government/central bank responses will be the key to any stable recovery.

05.01.2022 Curiouser and curiouser... Retail investors globally have taken advantage of home lockdowns to set up share trading accounts, and the results are certainly interesting. Whether or not they are profitable or logical is something that only time can tell.. https://www.afr.com//solvency-liquidity-and-insanity-in-th

05.01.2022 I always enjoy reading Chanticleer - the rear page of the Australian Financial Review. The journalists penning these articles are long-term, sophisticated media people, with a good eye for detail. So when an article talks about the Future Fund and its investment performance, I'm always interested in the views presented. Today's rear page included coverage of the 2020 calendar year returns of the Future Fund. The fund's investment management is always under the spotlight becau...Continue reading

04.01.2022 Some super funds have been chasing returns at the cost of managing risk. The result is that they are not prepared for large market shocks, such as the Caronavirus. A counter-argument is that the Caronavirus is unprecedented. I would suggest that every market shock is to some extent unprecedented. If every market shock were the same, investors could all adopt the same counter-strategy and all would be well. If the government steps in to assist these super funds then yet again ...poor custodial management is rewarded. This is similar to the GFC where the institutions that created the GFC conditions were the ones who received the greater benefits of public support. While it is important to support super fund members - especially in default "MySuper" accounts - I would hope that something is learned from this episode. Most especially, that super funds should not be aiming broad swathes of member money at illiquid assets on the assumption cash in high quantities will never be needed. For years, super funds with very high exposures to volatile assets have posted superior returns to funds with much lower exposures. This works great in recovering or rising markets but is obviously not so great in falling markets. Perhaps ASIC officers looking at their AustralianSuper default MySuper fund account balances will see the logic in taking a more prudent approach to asset allocation for members who are not making their own decisions of where their money is invested.

04.01.2022 But how will we pay for this? Good question. I've linked an article that has a clear and logical look at how governments might be able to pay back the huge amount of money that has been/is being, spent on coping with Covid-19 economic issues... https://www.vanguardinvestments.com.au//how-will-we-pay-fo... Photo by Edwin Hooper on Unsplash.com

04.01.2022 Some end of year general advice tips from the people at the Financial Planning Association.

03.01.2022 Ethics and the Ford Pinto. Any thorough Ethics course will cover the highly controversial case of the Ford Pinto. At what stage does it become ethical to consider placing a value on a human life? The linked article attempts to start this conversation for Australia's reactions to the Caronavirus. Is this realistic? What do you think?... There are actually lots of lessons to be learned from the Ford Pinto fiasco. You can look them up on the net, but should you not get time, here's an overview to get you started... https://hbr.org/2011/04/ethical-breakdowns

02.01.2022 Following on from my earlier post - how do leaders decide which companies should be supported during these extraordinary times? The linked article is a piercing critique of some industry leaders and the issue of bias, when considering bailouts. I would expect such problems and arguments to increase in coming months. If you were in charge of the country's accounts - who would you support?

02.01.2022 After large market falls, I have noticed the emergence of more retail investors deciding to open share accounts and try their hand at investing. Some do brilliantly, some do ok, most do awfully. If investing were as easy as just picking some shares then that's all anyone would be doing. But it's only part science and just as much an art. One thing that it's really not supposed to be - is a gamble. You CAN gamble, of course - it's your money after all - but that's not the purp...ose of the share market. The linked article covers the huge lift in retail investors entering share markets during and after the Covid-19 induced lockdowns and share market falls. It's a fascinating thing. It reminds me of the Bitcoin cryptocurrency craze at its height. Some people made a lot of money. Many though, lost a lot of money. All of which is ok - except I do think that we'd all feel a lot better knowing just what the chances are of us making or losing money. It seems that many new investors in this latest trend, have absolutely no idea of the marketplace they are entering. https://spotlight.morningstarhub.com.au/easy-money-downloa/ Photo by Derek Lynn on Unsplash.com

02.01.2022 Government stimulus measures are not my area of expertise. A quick look at the complexities of something as supposedly simply as a "supplement payment", shows why advice in these areas is necessary for so many people - yet it is these very same people who are unable to pay for the advice they need. Possibly a good time for the government to employ some of those old advisers its recent regulations have caused to leave the industry? ... I quite like that idea. People whose skills and knowledge were tossed aside as irrelevant to a modern world, being given a chance to use those skills to help people who need it most. It would appear that the one thing most missing during this Caronavirus tumult, is comprehensive, sensible and well-thought-out organisation of Australia's labour pool Here's a bit of an example for you.. while the UK army helps set up Covid overflow emergency hospital beds in empty stadiums, Australia's private hospitals say they're going to close unless the government gives them lots of money. Somebody is not talking to somebody.

01.01.2022 Way back in a year that started with a "19", I received my initial financial adviser training from a team that included Paul Clitheroe - for many years, Paul was the host of a popular tv show about money. Here are some simple, yet logical words from Paul about dealing with current market turmoil. Remember that internet advice doesn't apply to everyone - this is just a quick overview of Paul's experiences during such downturns.

01.01.2022 As a financial planner, the line between planning and counselling can become quite blurred at times. The linked article discusses the official differences between a financial and a financial adviser. I am sharing this because this week a number of clients have used the term "counsellor" to describe my services. That counselling aspect tends to evolve when there has been a substantial and long-term relationship. It's one of the most rewarding aspects of my job, but it's a di...fficult one to suggest as a reason for seeing a financial planner. Many industry commentators and legislators see advisers as "occasional visit" folk. They believe a person does not need a financial planner ongoing, and any such relationship is just not necessary. That is true of many situations, but if your planner is there as a coach or someone to offer ongoing support - then that is a different relationship to someone who is simply there when you run into trouble or when laws become a bit tricky. I am now old enough to have seen people move into their occupations, work hard, raise families and now retire. It's an immensely rewarding and satisfying position, when people know they can rely on you year after year. A financial planner may not be a financial counsellor in a technical sense, but a long term relationship with a financial planner can evolve into something of a counselling role. That's especially true when someone learns and grows their financial knowledge, experience and skills over time. Eventually, they are able to do most of the financial work themselves, and turn to their adviser for a second opinion or for a sounding board for their thoughts, ideas and options. The link seems to have collected my picture instead of the article photo. Click on my photo anyway - it will take you to the article. https://www.moneyandlife.com.au//financial-counsellor-or-/

01.01.2022 What are financial planners reading about right now? Well, it's mostly comparisons of this Caronavirus crash against past market crashes. Are there similarities? Can the past actually teach us anything helpful in strange times such as these? In this case, an economist is putting probabilities into different scenarios that could play out over the coming year or so. It's interesting reading - but please remember that anything you read about what *might* happen in the future, is... just a guess. Nobody knows the future, and it's mostly luck that allows people to say "I told you so" over this or that specific decision. The big question for investors is whether they are prepared for a range of scenarios or whether they are taking a higher risk position of planning on only one possible outcome? https://www.livewiremarkets.com//expect-a-retest-of-march-

01.01.2022 A son has the family home sold, and his mother has to leave her home, so he can have access to estate money. Curiouser and Curiouser. The world of estate planning is fraught with wants and desires and needs versus preferences.... Please make sure you have a valid will in place. Please make sure your will reflects your wishes. And in a complex and sophisticated world, please make sure you have a power of attorney in place, so that someone can act on your behalf for financial matters, when you cannot.