During a year when there was so much drama, and turbulence in investment markets, 2020 ended much like it started – with most equity markets at or near all time highs!
During the year we saw the sharpest and fastest bear market in history followed by an equally astounding rebound in global equity markets. The pace of the market recovery amidst a global pandemic and lockdowns was a greater surprise than the pandemic induced sell-off. If 2020 isn’t one of the most humbling years for market pundits and forecasters, then it is hard to imagine what would be!
Yes it’s that time again. Time to relive a scene that’s played out with annoying regularity. The one where skittish financial markets combine with an eyeball-chasing media to help the nervous transfer their future wealth to the patient.
Once again the headlines are screaming about financial disaster and impending doom. “Aussie stock market slumps after US-China trade war prompts Wall Street plunge” cried one earlier this week, while “Wall Street slumps as yuan slide intensifies trade fears” shrieked another.
These headlines are designed to grab your attention. That is, after all, the whole purpose of eye-catching headlines; the more dramatic they are the more likely you are to be drawn to them. And the more sales, subscriptions and ad revenue generated. Very possibly at the expense of investors who will be spooked into taking short-term, reactive, action to their long-term financial detriment.
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.
Yeay, we made it!! The end of another work year. Seriously, where did 2018 go? Now that you’ve made it to the finish line, it’s time to kick those work shoes off, grab a cold beverage and relax. And what better way to unwind than burying yourself in a good book?
Finance is full of jargon. If you do a quick online search for “investing terms” you’ll find everything from “quadruple witching” to “xenocurrency”.
We’ve decided to go back to school and give you the ABCs on the investing terms we believe are the most important for you to understand. It’s not exhaustive, and rather than put filler we’re skipping some of the letters. But after reading this post, you’ll have a better understanding of the terms we float around. Continue reading “The ABCs (mostly) of investing”
You’d have to have been living under a rock, meditating in a Buddhist monastery high in the Himalayas or lost at sea to not know that global sharemarkets have been taking something of a beating over the past couple of months.
With headlines like “Local sharemarket sheds $50 billion in worse one-day fall since February” screaming at you from your morning newsfeed it can be difficult to keep a sense of perspective when the occasional, invariable, bout of market jitters occurs. There is more than a grain of truth to the old news adage, “If it bleeds, it leads”.
Some researchers suggest that humans may have a “negativity bias” hardwired in our subconscious, and that our brains are more sensitive to signs of threat than to those of opportunity.
In prehistoric times such a bias could well have been an advantage, keeping early humans safe from harm. But in today’s world of global, instantaneous, round-the-clock news, that bias to action in the face of danger could end up costing you a fortune.
It’s a lovely spring day and because you’re in a good mood you login to your Clover dashboard to see your money at work. After giving a whoop of joy you decide to double-check these returns…and something seems off. Why are your calculations different from what you’re being shown? What’s going on?
The discrepancy has to do with how we calculate returns. We’ve decided to re-post an excellent explanation on how we calculate your fees. WARNING – some maths are involved here but we promise to keep it simple.