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Key Take-outs
- The comfy armchair ride global share investors experience during 2017 turned into a white-knuckled roller-coaster in 2018.
- Key global share markets came under significant selling pressure from September on, with the US market falling sharply as the year ended.
- After starting to fall in late 2017, residential property price falls accelerated in Sydney and Melbourne during 2018, while Hobart rose strongly.
- Cryptocurrency, the investment mania of 2017, crashed in spectacular fashion, with Bitcoin falling 80% during 2018 .
- 2018 proved there is no such thing as riskless returns, and that the occasional burst of volatility is the price of admission that all investors have to pay to receive returns better than Cash (i.e. 0% p.a. after inflation and before tax).
- Low-cost diversification is still the single best way to get your fair share of market returns without flaming out on a single bet (ahem, #CryptoLife).
In our 2018 Financial Year in Review (for the year to 30 June 2018) we spoke about the unusual calm that had dominated markets during 2017, noting that “… 2017 produced a Goldilocks-like investment environment of steadily rising asset valuations.”
Unfortunately, as anyone who is familiar with the fairy tale knows, Goldilocks made herself at home in a stranger’s house, assuming it was a riskless act, only to be surprised by three angry bears unimpressed by her sense of self-entitlement.
As with Goldilocks, many share investors were lulled into a false sense of security during 2018, only to be mauled by a bear of a market.
