April 2024 Newsletter
April 2024 @ Longreach Private Wealth
It's April already and we are back to work after Easter, we hope you enjoyed a peaceful and relaxing holiday weekend, as we look ahead to commemorating ANZAC Day with respect and honor.
Expectations of interest rate cuts later this year in Australia and the United States fuelled activity in the markets last month. The S&P/ASX 200 ended March on another all-time high. Mining shares are driving the market with gold, iron ore and lithium all rebounding. In particular, gold's rise and rise saw it close at its highest ever US$2,230 an ounce as investors seek a safe haven from geopolitical tensions and interest rate falls.
In the US, the month was slightly less active for markets but since the beginning of the year, the S&P500 has put on just over 10%, the Nasdaq more than 9% and the Dow 5.6%.
The Australian dollar continues to fall with the just released CPI figures for February unchanged from the previous two months at 3.4%. Meanwhile the US dollar is strengthening.
Amid the mixed bag of economic indicators, household wealth has risen for the fifth straight quarter, up by 2.8%. That's largely due to house price increases but share market growth has also played a part.
Retail turnover rose 0.3% in February thanks to the Taylor Swift phenomenon with her sell-out concerts in Sydney and Melbourne boosting spending. Taking Swift out of the equation, spending has stagnated after the excitement of the Christmas sales.
Thank you for choosing us for your financial guidance. Remember, our team is always here to support you, so feel free to reach out with any questions or concerns you might have. We're also happy to extend our services to your loved ones, should they need financial advice.
Looking forward to our continued partnership and your financial success!
Peter, John, Sharon, Kirstin & Wendy
Markets love certainty, but what happens next?
Financial markets can be like finely tuned racehorses, poised to gallop ahead under ideal conditions but often highly reactive to unexpected events.
It's often said that the markets love certainty. Investors feel more confident when economic conditions are stable and predictable.
But certainty in financial conditions is never a sure thing. Uncertainty is always just around the corner with the possibility of changes in interest rates, new laws or regulations, upheavals in overseas markets, a breakdown in Australia's relationship with a major trading partner, and wars and political instability.
As a result, stability and predictability are most often fleeting with peaks and troughs in prices inevitable.
Look at the past few years. Between 2020 and 2022, we were dealing with the side effects of COVID-19 on the economy and markets. Since 2022, interest rate rises, increases in the cost of living and conflicts in Ukraine and the Middle East have caused further market volatility.
This year, global political stability may be affecting markets with almost 50% of the world's population due to head to the polls to choose new governments including the United States, India, Russia, South Korea and the European Union. Interest rate movements in Australia and overseas are another focus.
In this dynamic environment, investors find themselves grappling with crucial decisions about how to safeguard and optimise their portfolios.
It could be useful to know that making hasty decisions, reacting quickly to the latest event, may not be the best move.
Consider the performance of various assets classes over 24 years. If you had invested $10,000 in a basket of Australian shares on 1 February 2000, for example, your portfolio would have been worth $67,717 at 31 January 2024, delivering a return of 8.3% each year. The same amount invested in international shares over the period would have provided a 5.4% annual return with your portfolio then at $35,373.
US investment advisers Dimensional have calculated the risk to a portfolio of being out of the market for even a short period.
An investment of US$1,000 in 1998 of stocks that make up the Russell 3000 Index, a broad US stock benchmark in 1998, would have turned into $6,356 for the 25 years to 31 December 2022. But if you had decided to sell up during the best week, before later reinvesting, the value would have dropped to $5,304. Miss the three best months, which ended June 22, 2020, and the total return dwindles to $4,480.
In other words, reacting to events by quickly selling up can have an unwelcome effect on your portfolio.
Source: Dimension Funds Advisors
Trying to time the market by identifying the best and worst days to buy and sell is almost impossible. Investing for the long-term in a well-diversified portfolio can better suit some investors.
Historically, long-term investors who have weathered short-term storms have been rewarded. Markets have shown they tend to recover over time, and a diversified portfolio allows investors to capture the upside when conditions improve.
And there’s a bonus. The compounding effect of returns over an extended period can significantly enhance the overall performance of a portfolio if they are reinvested.
Why diversify?
Different asset classes – such as shares, bonds and cash – perform differently at different times.
By diversifying investments across different asset classes, regions and companies can work towards reducing the effect of a poorly performing asset on the overall portfolio, providing a buffer against volatility and lowering risk.
Appreciating the lessons learned from the past while also understanding that past performance may not predict future performance, is a helpful way of navigating the uncertainties of the global markets.
We can help you stay committed to a robust investment strategy, design a portfolio that meets your objectives and help navigate the complexities of the markets. Reach out to us to help you invest confidently.
Dive into deep focus to unlock your true potential
Phone buzzing, emails constantly popping up, ongoing chats with colleagues, responding to meeting invites and all the while trying to work on that report. Sound familiar?
While we’ve all become reasonably proficient at multitasking in this digital age, numerous commentators are pointing to the toll the constant distractions are having on our productivity and the outcomes of our efforts. So, let’s look at the benefits of deep focus – uninterrupted time to work at your maximum potential and create quality work, faster.
What is deep work?
The notion of ‘deep work’ or an intense, productive focus, was first coined by computer science professor and author Cal Newport. Cal suggests that our online tools are making us lose the capacity for focus in a hyper-distracted world. He argues that for your brain to work at its maximum potential, you need to enter a state of focus, with no external distractions.
Multitasking as an impediment to productivity
While multitasking is an essential survival tool, it’s not great for your productivity to be in that state constantly.
When you switch between tasks - for example responding to an ‘urgent’ email while drafting a proposal - some of your attention remains on the previous task so you are still mulling over the email when you go back to your proposal. This is known as attention residue, and it impedes productivity. Research shows that it can take more than 20 minutes to get your train of thought back on track and up to speed after an interruption, which could mean if you are constantly responding to interruptions, you are never working at your full capacity.
It's also been demonstrated that not only do people take longer to complete tasks when multitasking, they are also far more likely to make mistakes, so accuracy plummets when you are hopping from one thing to the other.
Why is deep focus so effective?
Each time you practice deep focus, leads to more effective learning. When you concentrate deeply on a single task, your brain creates pathways to consolidate and reinforce learning which means you are literally rewiring your brain to help you perform at an optimal level.
How to dive deeper
Ok, I hear you saying. This all sounds great but how do I fit this into my already busy life when finding an uninterrupted block of time feels next to impossible?
Once you start to use deep flow as part of your daily routine you may find that you are accomplishing more and getting through your workload a little faster, given the productivity benefits so you’ll free up time.
It’s important to schedule and prioritise how you are spending this precious deep focus time to maximise the benefits. One way to achieve deep focus can be to schedule regular blocks of time to dedicate to important tasks that require focus, followed by short breaks.
A time management technique known as the Pomodoro technique suggests that the optimal time for concentration is 25 minutes, followed by a short five-minute break. Don’t feel that you must set a timer if that feels too restrictive for you, as you can adjust the timings to suit you and your workflow. The idea is to set aside blocks of time and impose time limits on your tasks to focus, taking breaks in between bouts of intense focus to refresh yourself.
Consider when you are at your best to undertake these important deep flow tasks - whether its first thing in the morning, after a bite to eat at lunch, or later in the day.
It’s also important to accept that interruptions will inevitably happen and try not to get angry or upset as that will derail your train of thought.
Finally, don’t be afraid to play around with what works for you and experiment with adding some deep flow into your work processes. You’ve got nothing to lose and everything to gain. So, what are you waiting for - turn that phone onto silent mode and dive deep!
Driving in India
By John Cameron B.Ec.B.Comm, Dip.Bus, MBA (Exec)
If anybody is thinking about driving when in in India, please take my advice – don’t do it.
Driving in India, especially in the cities, requires a very special set of skills which I feel sure no westerner could possibly acquire.
Let me paint the picture. The city streets are a swarm of rickshaws, scooters, motorbikes, tuck tucks, cars, buses and trucks, all forming and re-forming into a moving and constantly changing pattern much like a flock of swallows. At times it almost looks like it is happening in three dimensions. Did somebody say “stay in your lane?” – just a suggestion. There are lots of roundabouts, but I can’t for the life of me see whether ‘give way to the right’ is a rule. Maybe its just another suggestion.
Despite the chaos (I hesitate to call it organised chaos), it works. There are hardly any collisions, and no road rage.
So what do Indian drivers need?
Here are some suggestions:
A well honed sense of spatial awareness, measured in fractions of a millimetre, and around 360 degrees. If your awareness is 3 dimensional, that is even better. This enables drivers to keep going to where they want to, while missing others, while the others also manage to miss them. Everybody does their bit. There is ‘give and take’ on all sides, and no room for ego, as we know it. There is no road rage.
You need a good horn, and a willingness to use it. It is used to let people know ‘here I am’, please take account of me in your movements. The horn is not used in the way that it often used in Australia - as a tool to challenge another driver to a duel of some sort.
Watching the traffic in India is massively educational, great fun and endlessly enthralling.
Please Note:
The views expressed in this newsletter does not constitute advice in any way. If you would like advice on your current situation please contact us.