20 Feb 2024
The Age of AI has begun: The convergence
- Posted by Dejan Pekic BCom DipFP CFP GAICD
There have been moments in history when everything changed.
Right now we are living in one of these moments.
‘Software is consuming the World’ and this software is bringing everything together into a technological convergence that is and will continue to drive economic growth by creating trillions of dollars of sales revenue.
Click for chart.
This is being called the start of the 4th era in computing, Artificial Intelligence.
If you are not a Newealth client and want to take advantage of the convergence then please contact us.
16 Feb 2024
Friday Tidbit
- Posted by Dejan Pekic BCom DipFP CFP GAICD
It is next to impossible to always pick the winners.
This was the explanation that we gave to one of our clients who asked about making large individual investment bets.
This not only applies to individual investments but also to indices.
For example, how many times has the US stock market posted the highest calendar year return in the past 30 years?
The answer is none, not once did it deliver the highest return for investors.
Click for table.
The message, it is smart to diversify.
Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.
12 Feb 2024
Asian Century: China Property Collapse
- Posted by Dejan Pekic BCom DipFP CFP GAICD
This is expected to be the Asian Century given that half of the World’s population live in this region however China may not be as dominant as has been previously forecast for the following reasons.
Firstly, the One-Child Policy implemented between 1980 and 2015 to curb the country’s population growth will have dramatic negative impact on China’s working age population.
Secondly, the unfolding property collapse due to over building. Evergrande Group was China biggest property developer and has been ordered into liquidation by a Hong Kong court owing an estimated US$300 billion. Country Garden owes US$191 billion and is next with creditors applying for its liquidation.
This is a financial disaster for China which will cost in the trillions of dollars making it much larger than the 2008 Global Financial Crisis.
The World is currently holding its breath because financial markets do not know how to price this property collapse given China’s closed financial system.
The upside will likely be for buyers with large amounts of property being sold at fire sale prices.
Click to read.
Just remember, when asset prices fall due to some financial disaster, the outcome is always the same, investors are presented with an opportunity to buy more quality asset at a discounted price.
Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.
6 Feb 2024
Market Metrics: Commodity Prices
- Posted by Dejan Pekic BCom DipFP CFP GAICD
This is another excellent example of why investors should avoid chasing sectors.
Investing in sectors sound sexy and yes an investor can take their block of capital and invest it all in either consumer discretionary or consumer staples or energy or healthcare or information technology or real estate or utilities or financials or industrials or materials or communication services.
This is what happened in 2022 when Russia invaded Ukraine.
Material prices boomed for both hard and soft commodities because of the fear that the reduced supply would be permanent and so investors bought big but this all reversed in 2023 with commodity prices subsequently being crushed.
Click for chart.
The lesson is not to chase sectors and not to invest all the capital in one sector but instead to invest in a number of businesses that repeatedly produce profit from the sale of goods and or services.
That is how you manage risk, that is how Benjamin Graham did it and that is how Warren Buffet has done it.
Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.
1 Feb 2024
US Interest Rates: Down, down, down
- Posted by Dejan Pekic BCom DipFP CFP GAICD
Looks like it is all over for interest rate hikes.
The question now is how much will the Federal Reserve cut?
Market is thinking 2.5% from the current 5.25%-5.50% but it could be bigger if the United States finds itself falling into a deeper recession.
Click for chart.
Just remember, when the United States and or Australia do go into their next recession the outcome will be the same, investors will be presented with an opportunity to buy more quality asset at a discounted price.
Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.
