New Financial Year

New (financial) year’s resolutions

It’s that time of year again to start making some financial resolutions and review your portfolio. Last year, we were addressing some portfolio ideas in light of the volatility in markets.  As I write this year, by contrast, volatility in markets is at multi-year lows (over 50% lower than this time last year). So like

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Active vs passive investment

Active v Passive: is passive investment outperformance merely cyclical?

A claim currently receiving renewed attention in the long-contested active versus passive investment debate is that the apparent outperformance of passive investment strategies is largely cyclical, and usually only takes place in the late stages of a bull market.  This note, however, argues that while there may well be an element of cyclicality in passive

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Geographic lending restrictions could provide scope for lower interest rates

Contrary to the hopes of both the Reserve Bank of Australia and the Federal Treasury, economic growth is off to a bad start in 2017 so far.  Importantly, however, the recent Federal Budget included new powers for the Australian Prudential Regulation Authority to impose geographic-based lending restrictions.  If used, these new restrictions could allow scope

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Move over Macron: Italy could boost European stocks and sink the Euro

Despite the election of political centrist Emanuel Macron as French President, European investors would be wrong to conclude that threats to the sustainability of the Euro have now passed.  Indeed, a major new threat looms on the horizon – Italian elections.  Along with the prospect of higher US interest rates, this threat suggests the Euro

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Deflated orange balloon

Bond markets await central bank rationality

One of the more remarkable features of global financial markets in 2017 so far has been the failure of long-term bond yields to rise all that much, even though global growth and equity markets have improved.  This appears to largely reflect market confidence that central banks will retain extraordinary monetary stimulus, even in the face

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U.S Market Outlook: back to 2004?

Amid the geopolitical concerns simmering across the globe, the upcoming United States earnings reporting season has received less than usual attention. That’s a shame because early indications suggest corporate earnings are travelling reasonably well.  In fact, despite high valuations, US stocks could keep rising if earnings continue to grow – as seen, for example, between

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Thoughts on Australia’s housing “bubble”

Media commentary has been dominated in recent weeks by talk of Australia’s growing “housing bubble.” This note attempts to provide a factual perspective. It suggests that while Sydney house prices are now starting to reach past peaks in terms of mortgage (un)affordability, they are still a little below their average long-run premium to national house

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Financials flex their muscles: what’s good for banks is good for the economy

The decision by major banks over recent weeks to unilaterally raise interest rates on residential property loans, especially for investors, appears to be officially sanctioned and could helpfully ease demand pressures in the Sydney and Melbourne housing markets. That said, greed can be good! These actions could also conveniently help boost bank net-interest margins, which

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