Latest News from Newealth

Things that sparkle

• Posted by Dejan Pekic BCom DipFP CFP GAICD

Gold is an asset because it represents as store of wealth.

This undisputed fact has been the case for millennia and Gold is also purchased heavily in times of financial fear.

For example, the price of one ounce of Gold has risen to US$3,115 today which is a 39.1% increase in 12 months.

However, the problem with investing in this asset is that Gold does not multiply.

A bar of Gold does not produce baby Gold ingots which means an investor can make no money for extended periods such as between late 1970’s and the 2008 Global Financial Crisis (some 30 plus years) during which time an investor did not make a dollar.

Worst still is the inflation adjusted price of Gold which has seen no real growth for 45 years.

Click for charts.

Gold is a terrible asset for multiplying wealth.

The principles of Value Investing teach us to not invest in commodities, Gold might sparkle but it is just too risky.

WARNING, this does not constitute Personal Advice. To discuss if this is an appropriate strategy for your given circumstances, please do not hesitate to contact us directly.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

2025 Budget

• Posted by Dejan Pekic BCom DipFP CFP GAICD

The Federal Treasurer Jim Chalmers has handed down his fourth Budget and it is all about increased spending that is projected to keep the budget in a deficit to 2036 with this year’s budget deficit projected to be AU$26.7 billion.

It is just bad news for business with small businesses missing out on an extension to the $20,000 instant asset write-off and non-compete clauses being voided for employees earning less than AU$175,000 per annum.

It is important to remember that all Budget announcements are currently proposals and will still need to be legislated.

Click to read.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

Recession ???

• Posted by Dejan Pekic BCom DipFP CFP GAICD

Clients have been asking us if Donald Trump and his Tariff War is going to cause a recession in the United States.

The actual answer is that we do not know.

The latest probability for a recession in the United States sits at 23% likely which is low and down from last year.

Similarly, Australia is at 20% likely.

Click for charts.

Staying in cash and waiting for a recession in our experience almost always fails because the investor is not growing their assets against inflation while they wait.

Our response is to remain invested according to your appetite for risk and then react when the recession does occur because it will present an opportunity to buy more quality assets 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.

Tulip Mania versus Bitcoin

• Posted by Dejan Pekic BCom DipFP CFP GAICD

The printing of vast quantiles of money (issuing I-owe-you paper called notes, bills, bonds) by Central Banks around the World has been the key driver behind Bitcoin and cryptocurrencies but remember that the price of Bitcoin relies on The Greater Fool Theory.

The Greater Fool Theory is where a purchaser/investor buys an item/asset in the belief that the next purchaser/investor will buy it from them at a higher price.

There are only 21 million Bitcoins in total and so far 19.9 million have been collected which makes it rare and as long as there is a group who want to trade in this limited edition rarity (think of it as a collector’s item) there will be a price.

Once there is no longer a group that wants to trade in this collector’s item the price will evaporate.

Remember we have been here before, The Dutch Tulip Bubble (Tulip Mania) 1637.

Before 1633 the tulip trade in Holland had been restricted to professional growers but rising tulip prices tempted both the middle-class and poor families to speculate on tulip prices which went up, and up, and up until finally, the bubble busted when collectors no longer wanted to trade in tulips.

Click for chart.

We don’t really know how cryptocurrency will end but we do know what Benjamin Graham taught and that was to not speculate. Instead remain invested according to your appetite for volatility and when fear and panic take hold, react by buying more quality assets at discounted prices.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

Artificial General Intelligence (AGI)

• Posted by Dejan Pekic BCom DipFP CFP GAICD

This has been talked about for years and years and we are now only 12 to 24 months away from achieving AGI (Artificial General Intelligence).

AGI is thinking software or an artificial brain.

It is hard not be excited and terrified at the same time but nothing short of WWIII will stop AGI from emerging.

It will change everything for humans (how we work, play, communicate, socialize) but for business the increased productivity will initially be ridiculous as AGI begins to rapidly remove humans from the workforce.

Click to read.

This is just another step closer to ‘software consuming the World’.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

Newealth FSG (March 2025)

• Posted by Dejan Pekic BCom DipFP CFP GAICD

We have updated our Financial Services Guide.

For more details, click ‘Newealth FSG’ or alternatively go to the FINANCIAL SERVICES GUIDE link at bottom of the page.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

Stock Market Turbulence: US Tariff War

• Posted by Dejan Pekic BCom DipFP CFP GAICD

The Australian All Ordinaries Index (AORD) closed at a record high of 8,825 on 14th February 2025 and the Down Jones Industrial Average (DJI) closed at a record high of 45,014 on 4th December 2024.

As at close yesterday and overnight, both indices have fallen 8% which does not even rate as a correction (defined as a fall of 10% from recent peak).

Beware the media, they do like to talk up the drop in dollars becasue it makes for great headlines.

The likelihood that this could develop into a full-blooded crash (defined as a fall of 20% from recent peak) is always a possibility because it is not a matter of if but when will the United States go into its next recession and tariffs are certainly helping push the United States into a recession.

The key for investors as taught by Benjamin Graham is never to panic, invest according to our appetite for volatility and when the next panic takes hold, react by buying more quality assets at discounted prices.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

Big Ideas: AI Agents

• Posted by Dejan Pekic BCom DipFP CFP GAICD

It is difficult to disagree with the statement that ‘software is consuming the World’.

This year is predicted to be all about AI Agents, computer software (specifically, artificially intelligent bots) which will automate tasks, become predictive and work with other bots to enhance our user experience and drive business productivity.

AI Agents are already here and will change everything from search, to shopping, enterprise and knowledge work (and yes, that is all professional services).

Click to read.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

Market Metrics: ASX200

• Posted by Dejan Pekic BCom DipFP CFP GAICD

On Tuesday this week, the RBA (Reserve Bank of Australia) cut the official Cash Rate to 4.10% effective from Wednesday, 19th February 2025.

Interest rates cuts are good news for almost all assets because they increase the present discounted value of future income but this can also lead to asset price bubbles if the interest rate cuts end up being too big.

The attached is a historical reminder of the impact of impact of cutting interest rates on Australia listed companies and it is all positive with the exception the 1990 recession and the 2008 GFC.

Click for table.

Investing can be confusing but as Benjamin Graham taught, all we need to do is remain invested according to our appetite for volatility and when the next panic takes hold, react by buying more quality assets at discounted prices.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.

Asset Class Returns: The last 44 years…

• Posted by Dejan Pekic BCom DipFP CFP GAICD

Welcome to 2025.

The numbers are in for calendar year ending 31 December 2024 and growth assets have won the day.

Once again international listed companies toped the chart followed by Australian listed property for the second year in a row.

Click for index returns.

Please note that the numbers for 2024 do not reflect the opportunity to buy low and add to an investment holding when an asset class is out of favour which in turn accelerates the rate of return well above the index performance.

WARNING, past performance is no guarantee of future performance and these index return figures do not reflect the ability of top professional investment management teams to outperform their respective index/benchmark. Most importantly, the above does not constitute Personal Advice.

Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.