Tag: Global Economy

Introduction

Most of the time share markets are relatively calm, but periodically they tumble and generate headlines like “billions wiped off share market.” Sometimes it ends quickly and the market heads back up again. But every so often share markets keep falling for a while. Sometimes the falls are foreseeable (usually after a run of strong gains), but rarely are they forecastable (which requires a call as to timing and magnitude). And now with the US and Israel waging War on Iran its happening again with falls gathering pace as the War drags on. From their record highs earlier this year 7%, Japanese shares have fallen 13%, Eurozone shares are down 11% and Australian shares are down 9%.

While the details regarding the current plunge differ from past falls, from the point of view of basic investment principles, it’s hard to say anything new. Which is why this note may sound familiar with “5 key charts for investors to keep in mind”.

The current state of the War and flow on to markets

We are now into the fourth week of the War with no clear sign of an end – despite President Trump’s frequent reassurances that the end is near.

• A problem is Trump indicated regime change was a goal – along with a group of military objectives – and killing of Iran’s leaders and musing about replicating the Venezuelan model appear to confirm this.
• So, Iran took the long-predicted response of attacking regional oil and gas infrastructure and effectively closing the Strait of Hormuz.
• Which in turn has potentially created the biggest oil & energy shock in history given 20% of world oil and gas flows through the Strait.
• This in turn has led to a surge in oil and gas prices which in turn has seen bond yields rise on inflation fears, the expected profile for official central bank interest rates rise sharply and shares fall on fears of higher inflation and rates and weaker growth and profits.
• By declaring that the War would be over “very soon” on 9 March and that he was considering “winding down” the War on 20 March, both after sharp oil price rises, Trump has signalled he can’t bear the full economic and political costs of the War. So just like his TACO back down on tariffs last year, many assume he will do the same this time which is why the rise in oil prices and fall in shares has so far been relatively mild.  For example, global oil prices are up “just” 90% from their January low (compared to three or four fold increases in the 1970s oil shocks which were arguably smaller) and US shares have only fallen 7% and Australian shares 9% which are both much smaller than last year’s tariff related slump and the falls around the 2022 inflation and interest rate scare.
• But the Iranian leadership shows no sign of waving a white flag and in fighting for survival wants to inflict maximum economic and political pain on Trump – which they know they can do by restricting oil supplies. So this makes it harder to him to do a TACO.
• There are various workarounds to the Strait blockage – Saudia Arabia’s pipeline to the Red Sea, stockpile releases, US naval escorts, Iran letting non-enemy ships through, etc – but its unclear they are enough or will work. Eg the US doesn’t have the capacity to defend every tanker. If Iran lets too many ships pass it weakens its leverage. And the US may not like the idea of Iran deciding who goes through.
• Right now, despite lots of confusing comments from Trump the risk is more escalation – with a consideration of using troops and now threatening to obliterate Iran’s power plants. Iran is threatening more retaliation against energy infrastructure in response.
• Past oil price shocks unfolded over months as the impact became clearer – four months in 1973-74 when oil prices rose four-fold and over more than a year in 1979-80 when oil prices rose three-fold. So, it’s still early days.
• So, the threat of stagflation remains and it’s at a time of various other threats to shares around AI, private credit & stretched valuations.
• Current average capital city petrol prices in Australia of around $2.45 will if sustained add 1.5% to inflation taking it above 5% and add $114 a month to the household petrol bill which along with increasing risks of fuel shortages will lead to a big hit to economic activity.

Our base case is that the War and oil shock will be relatively short as Iran will not be able to keep the Strait closed indefinitely and Trump will look for an off ramp as political pressure builds ahead of the midterms. But it could still go on for weeks yet and so could still see oil prices rise more in the interim say to $US150. We continue to see the risk of a 15% or so correction in shares this year but the size of the threat means there is a high risk it may be deeper. Trying to work out how all this plays out is not easy. But looking at shares around major geopolitical events, the typical playout is for a sharp fall of around 8% but then a recovery over the next 12 months of around 14%. Of course, there are wide ranges around this. Given the uncertainty now is a critical time to stick to basic principles of investing. So, this note revisits five key charts investors should keep in mind.

Chart #1 The power of compound interest

This chart shows the value of $1 invested in various Australian assets in 1900 allowing for the reinvestment of dividends & interest along the way.

Includes dividends. Source: ABN-Amro Global Investment Returns Yearbook, Bloomberg, AMP

That $1 would have grown to $278 if invested in cash, to $998 if invested in bonds and to $1,000,977 if invested in shares up till now. While the average return since 1900 is only double that on shares versus bond, the huge difference between shares and bonds owes to the impact of compounding – or earning returns on top of returns over time. So, any return earned in one period is added to the original investment so that it all earns a return in the next period. And so on. Which means higher average returns over time compound into much higher end point values. Key message: to grow wealth, we must have exposure to growth assets like shares and property that provide higher long term average returns.

 

Chart #2 – Don’t get blown off by cyclical fluctuations in shares

The trouble is that shares can have lots of setbacks, eg, see the arrows on the previous chart. Even annual returns are highly volatile, but longer-term returns tend to be solid and relatively smooth. Since 1900, for Australian shares roughly two years out of ten have had negative returns but there are no negative returns over rolling 20-year periods.

Source: Bloomberg, AMP

Understanding that these periodic setbacks are just an inevitable part of investing is important in being able to stay the course. Key message: big short-term swings in shares are normal but the longer the horizon, the greater the chance your investments meet their goals.

Chart #3 Beware the roller coaster of investor emotion

Investment markets move more than can be justified by moves in their fundamentals, because investor emotion plays a huge part. The next chart shows the roller coaster that investor emotion traces through the course of an investment cycle. Once a cyclical bull market turns into a bear market, euphoria gives way to ultimately depression at which point the asset class is under loved and undervalued and everyone who is going to sell has – and it becomes vulnerable to good (or less bad) news. This is the point of maximum opportunity for investors to buy into an asset at depressed prices. Once the cycle turns up again, depression gives way to hope and eventually euphoria. This is the point of maximum risk.

Source: Russell Investments, AMP

Key message: investor emotion plays a huge role in driving swings in markets. The key for investors is not to get sucked into this emotional roller coaster. Of course, this is easier said than done, so many investors end up getting wrong footed – by buying at the top when everyone is bullish and selling at the bottom when everyone is bearish (like in April last year on US tariffs, or maybe soon on worries about the oil supplies).

Chart #4 The wall of worry

There is always something for investors to worry about. And this has certainly been the case since Trump returned with his contradictory and confusing utterances. But the global economy has had plenty of worries, but it got over them with Australian shares returning 11.6% per annum since 1900, in a broad rising trend, and US shares returning 10% pa.

Key message: worries are normal around the economy and investments and sometimes they become intense – like now. But they eventually pass.

This shows the All Ords price index while the first chart included dividends. Source: ASX, AMP

Chart #5 Timing markets is hard

With the benefit of hindsight many swings in markets around things like the GFC and the 2022 inflation surge look inevitable and so it’s natural to think about switching between say cash and shares within your super fund to anticipate market moves. But trying to time the market is difficult. A good way to demonstrate this is with a comparison of returns if an investor is fully invested in shares versus missing out on the best (or worst) days. The next chart shows that if you were fully invested in Australian shares from January 1995, you would have returned 9.4% pa.

Jan 1995 to Feb 2026 & includes dividends but not taxes & fees. Source: Bloomberg, AMP

If by trying to time the market you avoided the 10 worst days (yellow bars), you would have boosted your return to 12% pa. And if you avoided the 40 worst days, it would have been 16.5% pa! But many investors only get out after bad days & miss some of the best days. If by trying to time things you miss the 40 best days (blue bars), the return falls to 3.7% pa.

Key message: trying to time the share market is not easy. For most – whether as a super fund member or an investor outside super – it’s best to stick to an appropriate well thought out long term investment strategy.

Dr Shane Oliver
Head of Investment Strategy and Chief Economist

Worried about how oil shocks affect your investments?

Speak with our Financial Planners about protecting your portfolio during market volatility and staying focused on long-term goals. To book a meeting get in contact with us on 02 9328 0876.

This article was prepared by Dr Shane Oliver with opening and closing summary by William Bracey – CEO & Senior Financial Planner from Sydney Financial Planning. Dr Shane Oliver who provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Sydney Financial Planning Pty Ltd (ABN 29 606 413 254), trading as Sydney Financial Planning & Illawarra Financial Planning is an Authorised Representative & Credit Representative of Charter Financial Planning Limited, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information. If you no longer wish to receive direct marketing from us you may opt out by contacting Sydney Financial Planning . You may still receive direct marketing from AMP as a product issuer, bringing to your attention products, offerings or other information that may be relevant to you. If you no longer wish to receive this information you may opt out by contacting AMP on 1300 157 173.

Introduction

Australian shares have had a strong start to 2026 with the ASX 200 up 3.3% and flirting with a new record high. The local market has also outperformed US shares which are down 0.1% and global shares which are up 1.6%. However, this could just be noise and follows a significant underperformance against US and global shares since 2009. So, can the gains continue and is the 16 year structural underperformance finally over?

Source: Bloomberg, AMP

Australian shares in a long-term context

To get a handle on the future, it’s first useful to understand the past and here some key points on the performance of Australian shares:

• Over the very long-term Australian shares have been a strong performer. Since 1900 Australian shares have returned 11.6% per annum once dividends are allowed for versus 10.1% pa for US shares.
• However, Australian shares go through periods of relative out & underperformance or “mean reversion”. This can be seen in the next chart. Australian shares outperformed in the 1940s (indicated by a +), unperformed in the 1950s (indicated by a –), outperformed in the 1960s resources boom years, underperformed in the high inflation 1970s and 80s, outperformed in the 1990s (although Australia underperformed in the second half of the 1990s when the tech boom raged), outperformed dramatically in the resources boom of the 2000s and underperformed in the 2010s and this decade so far.

Includes dividends. Source: ABN-Amro Global Investment Returns Yearbook, Bloomberg, AMP

• The more recent swings in relative performance can be seen more starkly in the next chart. It compares the relative performance of Australian to global shares since 1970 in terms of: relative share prices in local currency terms (green line); relative total returns ie with dividends added in (blue line); and relative total returns with global shares in Australian dollars (red line). A rising ratio means Australian outperformance and vice versa.

•  As Australian shares pay high dividend yields (3.3% currently) versus global shares (1.5%), dividends should be included in comparisons of Australian & global share returns. So, the focus should be on the blue line (comparing total returns) or the red line which compares total returns in $As, and not the green line which only looks at share prices.

Source: Bloomberg, AMP

Several things stand out.

• First, as noted earlier, over long periods of time and when dividends are allowed for Australian shares have performed well versus global shares. Since 1970 Australian shares have returned (capital growth plus dividends) 10.2% per annum versus 8.9% pa for global shares in local currency terms. However, the falling $A over this period has enhanced the return from global shares to 10.4% pa but its not that different to the return from Australian shares.
• Second, the swings in the relative performance of Australian shares are apparent if dividends and currency moves are allowed for or not.
• Finally, since October 2009, Australian shares have seen a long run of underperformance. Over that period, they have returned 8.5% pa compared to 11.8% pa from global shares in local currencies or 12.9% pa from global shares in Australian dollar terms (as the $A fell).

Why has Australia underperformed since 2009?

The underperformance of Australian shares since 2009 reflects a combination of: payback for the huge mining boom related outperformance of the 2000s; the slump in commodity prices from 2011; the lagged impact of the surge in the $A above parity against the $US into 2011; relatively tighter monetary policy in Australia for much of the post GFC period; fears that higher post pandemic interest rates will hit Australia harder due to more indebted households and Australia’s expensive property market; worries about the slowing Chinese economy; and a low exposure to tech stocks – with tech stocks propelling US shares in the pandemic and more recently with AI excitement.

Five reasons Australia’s underperformance may be at or close to over

There have been several occasions over the last few years where it looked like the relative underperformance of Australian shares may be ending  – such as around 2018-19 and 2022 – only to see it resume taking the ratios in the previous chart to new lows for this cycle. But there are now several positives for the Australian share market suggesting at least more upside on a 12 month view and possibly some relative outperformance.

1. Mean reversion – the historical experience tells us that after a lengthy period of underperformance the local share market eventually bottoms and outperforms for a few years. This may now be due after more than 16 years of underperformance.
2. Rotation from tech to non-tech shares – global investors appear to be rotating away from tech shares on the back of concerns about stretched valuations, excessive capex related to AI and worries that AI will decimate software businesses (ie “tech eating itself”). This will work against the tech heavy US share market (and was evident in the global relative underperformance of US shares last year) and may benefit the Australian share market. As we saw in the tech wreck of 2000-03 Australia’s low tech exposure turned out to positive for Australian shares and helped kick of a long period of outperformance.
3. A new super cycle in commodities – the commodity price slump from their 2008-2011 highs looks to be over with commodities embarking on a new super cycle bull market driven by constrained supply after low levels of investment and electrification and rising defence spending driving increased demand for metals. This will benefit Australia’s resource stocks. Iron ore is likely to feature less this time around partly reflecting slowing urbanisation in China and its property slump. But it’s worth noting that copper is now a bigger contributor to BHP’s earnings than iron ore.
4. Artificial Intelligence could add to demand for commodities – North American research provider the Bank Credit Analyst has posited that if AI driven robotics effectively boosts the supply of labour and drives a surge in global GDP, then the value of other factors of production like land and natural resources will soar. So, Australia might turn out to be a big long-term beneficiary of the AI revolution.
5. Company profits are rising again in Australia – this is the key driver in the near term. After three years of falls listed company profits are turning up with the latest profits reporting season confirming this:  upside surprises have been surpassing downside surprises by almost two to one which is the strongest since 2021 and more companies are reporting profits and dividends up on a year ago compared to what was occurring in 2023 and 2024.

What happens now, after the Iran/Middle East attacks? 

The risks

Oil and gas prices rise, leading to higher inflation worldwide, followed by higher interest rates globally. This generally results in slower economic growth around the world. Hopefully, this is a short, sharp event, and Iran is free and able to rebuild its economy and develop friendly relationships with its trading partners. In that case, oil prices would fall, inflation would ease, and economies would grow. 

However, if the conflict were to escalate into a prolonged war, it would place significant strain on the global economy. 

The upside

The upside is that tensions in the Middle East ease, stability returns, oil prices fall, interest rates come down, and global economic growth strengthens. 

Source: Bloomberg, AMP

Consensus earnings expectations for this year have risen to 13%.

Source: UBS, Bloomberg, AMP

But it’s unlikely to be smooth sailing

There are three key threats or constraints for Australian shares:

1. Valuations are rich with the forward PE of 20 times well above its norm of 15 times and the absence of a risk premium over bonds.
2. The RBA’s hawkish bias with the high risk of more rate hikes could threaten the Australian economic and profit growth outlook.

Source: Bloomberg, AMP

3. Global uncertainty around tech shares, US policies and geopolitics. As we have seen in the past, big ructions in US tech shares can have a flow on to Australian shares even if we have a low exposure to tech stocks. While the US Supreme Court has provided confidence that legal constraints remain on President Trump and Trump is now more politically constrained with the midterms this year, his replacement tariff strategy has ramped up the uncertainty around US trade policy. Finally, the high probability of another US strike on Iran risks a spike in oil prices should Iran decide to be uncooperative.

In closing

Being an avid share investor for over 50 years and a financial planner for almost 40 years, I’ve learnt that trying to predict investment returns short-term is a guess at best. But what I know with great certainty is what investment returns will be over the medium to long term, as long as you are well-diversified and your portfolio is well managed and aligned with your goals. The outlook for Australian shares remains positive. As good companies keep increasing their profits, the share market goes up. When the market underperforms, it represents better value. I never like paying full price! We will see what happens with AI stocks getting way overvalued; they have come back to earth at some point. Uncertainty always affects valuations. COVID was a good example; the ASX is now 71% higher than in March 2020, and that doesn’t include dividends.

It will be a bumpy ride forward, but if you build this into a broader portfolio of assets advised by Sydney Financial Planning, the benefits are clear. It’s easy for me to look back as I’ve been doing this for a long time – helping clients build wealth and live a better life, so I have greater wisdom and a grey hair to match.

Bill Bracey
CEO & Founder of Sydney Financial Planning

Want to maximise your Australian share opportunities?

Speak with our Financial Planners about optimising your Australian equity exposure for 2026 and beyond. To book a meeting get in contact with us on 02 9328 0876.

This article was prepared by Dr Shane Oliver with opening and closing summary by William Bracey – CEO & Senior Financial Planner from Sydney Financial Planning. Dr Shane Oliver who provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Sydney Financial Planning Pty Ltd (ABN 29 606 413 254), trading as Sydney Financial Planning & Illawarra Financial Planning is an Authorised Representative & Credit Representative of Charter Financial Planning Limited, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information. If you no longer wish to receive direct marketing from us you may opt out by contacting Sydney Financial Planning . You may still receive direct marketing from AMP as a product issuer, bringing to your attention products, offerings or other information that may be relevant to you. If you no longer wish to receive this information you may opt out by contacting AMP on 1300 157 173.

“The stock market is the story of cycles and of the human behaviour that is responsible for overreactions in both directions.”
Seth Klarman( hedge fund manager and investor).

“History doesn’t repeat but it rhymes.”
Often attributed to Mark Twain.

Introduction

Whether it be the cycle of day and night, seasons, tides, the weather, fertility cycles, birth and death, etc, cycles are integral to life. And so too for economies and investment markets. Some are regular, some just rhyme. Despite attempts to end or subdue them via economic policy and regulation they live on. Usually when we declare investment cycles dead, they come back to bite us. Sometimes they bring much joy to investors, but they can also bring much angst. But what are they? What causes them? And why do investors need to be aware of them? This is particularly relevant after several years of great investment returns.

Cycles in cycles

Cycles in investment markets invariably refer to swings between good and bad returns. They usually take their lead from fundamental economic & financial developments but are magnified by waves of investor optimism and pessimism. There are three cycles of particular relevance.

Long term or secular cycles – share markets go through long term or secular bull and bear phases, often lasting between 10 to 20 years. This is most clearly evident in the US share market and illustrated by the next chart.

Source: Bloomberg, R.Shiller, AMP

It shows the cumulative real value of $100 invested in 1900. Secular bull markets – or 10-20 year periods where the trend in shares is up – can be seen in the 1920s, 1950s and 60s, the 1980s and 90s and over the past decade. In between in the 1930s and 1940s, 1970s and 2000s are secular bear markets – which are long periods where shares have poor and volatile returns.

Secular bull and bear phases are often related to what is known as Kondratiev waves, which take their lead from waves of technological innovation. Starting in the 1780s, water power, textiles and iron drove the first industrial revolution; steam, rail and steel drove the second industrial revolution; electricity, chemicals and the internal combustion engine drove a third Kondratiev wave into the 1920s; petro chemicals, electronics and aviation drove a fourth in the 1950s and 1960s; the IT revolution helped drive a fifth wave in the 1990s and another spurt more recently with digital media and artificial intelligence. These were associated with secular bull markets in the 1920s, the 1950s & 60s, the 1980s & 90s and over the last decade, with the move to lower interest rates and associated speculation also playing big roles in the last two.

At the end of each long-term upswing, share markets reached overvalued extremes and investors had become excessively exposed as optimism that good times would roll on forever reached extremes. This left shares vulnerable as excesses such as too much debt (1930s and 2000s), excessive inflation (1970s) and excessive speculation in tech shares and then housing in the late 1990s and 2000s became overwhelming, giving way to economic weakness and secular bear markets.

In terms of actual share market fluctuations, the 3-5 year investment cycle is evident in the swings in rolling 12-month changes in Australian share prices. Periods of poor returns are invariably followed by periods of strong returns (and vice versa) but trying to time this can be very hard. See the next chart.

Source: ASX, Bloomberg, AMP

Short term sentiment cycles – within the 3 to 5 year investment cycle there are also short-term swings (weekly, monthly) between overbought and oversold for things like shares and currencies driven by swings in investor sentiment, but which can relate to the tendency for economic data to run through hot and cold periods, particularly relative to market expectations. They can often give rise to corrections in share markets, with say 5 to 20% falls.

Some observations

There are several points to note regarding investment cycles:

• No two cycles are the same and their duration can vary so they don’t operate to precise years, despite claims by some to the contrary. But they do have common features, usually being set off by economic or financial developments and accentuated by swings in investor sentiment which can push them to extremes from which a reversal can occur. As such, while history doesn’t repeat, it rhymes.
• There are cycles within cycles. For example, even though US shares were in long-term secular bear markets in the 1970s and 2000s they still saw periodic cyclical swings in economies and share markets.
• When several cycles combine the impact can be huge. For example, a business cycle downturn in 000 coincided with an end to the secular boom of the 1980s and 1990s and saw 50% falls in global shares in the period 2000 to 2003.
• Despite various attempts to smooth them out (via economic policies and regulation) or declare them dead, cycles live on.
• Cycles can be self-limiting as economic downturns lead to lower inventories, pent up demand and lower interest rates, which sow the seeds of recoveries. Share slumps result in cheap shares which entice bargain hunters and sow the seeds of a new bull market.
• Investment cycles provide opportunities for investors to vary their asset allocation through the cycle, e.g. buying more shares into downturns and cutting exposure into upswings.
• But timing investment cycles is difficult. No one rings the bell at the top or bottom. And given the psychological tendency of individual investors to project recent market moves into the future (referred to as “recency bias”) and find safety in what the crowd of other investors are doing, the main risk is that investors, in seeking to time investment cycles, end up wrong footed by selling after big falls and buying after big gains. So, for most investors it’s important to be aware of cycles and understand that they are normal, but then to take a long-term approach to investing that looks through them and makes the most of the compounding of returns over long periods.

Where are we now?

We are currently in a reasonably positive phase of the 3-5 year investment cycle as inflation has cooled from its 2022 high which has enabled central banks, including the Fed and RBA, to cut rates and provide a boost to economic growth. Sometimes this is referred to as “goldilocks” i.e. not too hot and not too cold. This has been reflected in strong gains in share markets over the last three years. However, President Trump’s tariffs have complicated the normal cyclical pattern by boosting US inflation and depressing employment and imparting downside risks for the US economy. And shares have had three years now of strong returns resulting in stretched valuations particularly with signs that key large cap US stocks, often referred to as the Magnificent Seven (Apple, Microsoft, Alphabet, Meta, Amazon, Nvidia and Tesla), may be becoming a bit bubbly. All of which are warning of a pullback in shares which would not be out of line with their normal volatility as evident in the previous chart, before receiving a further boost from lower interest rates.

While AI developments remain very promising, we may be entering a weaker more constrained phase of the long-term investment cycle reflecting less favourable economic policy and demographic trends which may make the world more inflation prone.

Other cycles of relevance

Seasonal patterns – There is a well-known seasonal pattern in shares that sees strength from November reflecting the ending of US tax loss selling, a wind down in equity raisings, new year cheer and the reinvestment of bonuses which continues after a brief pause around February into mid-year, before weakness from around May to October, particularly in August and September. Right now, we are nearing a seasonally strong period, although it’s a bit complicated by not having seen the normal seasonal weakness in August and September in the US.

Source: Bloomberg, AMP

Political cycles – these are less relevant in countries with an irregular political cycle like Australia. However, the US has a precise four-year federal political cycle, and this has given rise to a fairly regular pattern. This sees near average share market returns in the first year after a Presidential election, well below average returns in the second (or midterm election) year, but above average returns in the third year (as the President seeks to stimulate the economy), and average returns in the fourth year. In fact, since 1950 the US share market has experienced an average top to bottom fall in the mid-term election year of 17%. So next year could be a bit rougher for US shares and this could flow to Australian shares.

In closing

I have been following investment cycles for about 40 years now, and they can indicate future trends. But I have also learned, more importantly, that trying to time the market is nearly impossible. That’s
why it is so important to have an investment strategy and financial plan in place and regular reviews by your financial planner.

Please call our office on 02 9328 0876 if you need a review or if you have a friend or family member who needs financial advice.

Bill Bracey
CEO & Founder of Sydney Financial Planning

Is your investment strategy prepared for market cycles?

Speak with our Financial Planners about navigating market cycles and protecting your portfolio through economic shifts. To book a meeting get in contact with us on 02 9328 0876.

This article was prepared by Dr Shane Oliver with opening and closing summary by William Bracey – CEO & Senior Financial Planner from Sydney Financial Planning. Dr Shane Oliver who provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Sydney Financial Planning Pty Ltd (ABN 29 606 413 254), trading as Sydney Financial Planning & Illawarra Financial Planning is an Authorised Representative & Credit Representative of Charter Financial Planning Limited, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information. If you no longer wish to receive direct marketing from us you may opt out by contacting Sydney Financial Planning . You may still receive direct marketing from AMP as a product issuer, bringing to your attention products, offerings or other information that may be relevant to you. If you no longer wish to receive this information you may opt out by contacting AMP on 1300 157 173.

Australian home prices will likely see further softness aheadof rate cuts providing a boost in the second half of 2025.

Another year of Goldilocks in 2024…

2024 was like a rerun of 2023 with lots of angst but it turned out okay. Key big picture themes of relevance for investors were:

1. Stronger than feared growth. Yet again the much feared recessionfailed to materialise. Despite the monetary tightening of 2022 and 2023 and China’s property collapse, global growth in 2024 remained just above 3%. In Australia, despite a “per capita recession”, economic growth remained positive albeit at only around 1% helped by strong population growth, stronger than expected growth in public spending and labour hoarding offsetting severe mortgage pain for some.
2. Global divergence. Within emerging countries, India grew around 6.5%, China grew around 4.8% (which is slow for China) but South America and the Middle East only grew around 2%. And within developed countries, US growth remained strong at around 2.8% but growth was just 0.8% in Europe and around 0.3% in Japan.

…resulted in strong returns for investors

There were a few bumps along the way for shares – notably with an inflation scare in April and a growth scare into August – but they were relatively minor (with brief falls in shares off less than 10%). For diversified investors 2024 was another strong year.

Investment returns for major asset classes

* Year to date to Nov. Source: Bloomberg, Morningstar, REIA, CoreLogic, AMP

• Global shares had a strong year as rates fell, albeit less than expected, and profits were stronger than expected.
• US shares outperformed reflecting its stronger economy, tech exposure and a boost from Trump’ s re-election promising US friendly policies. By contrast non-US shares underperformed, particularlyEurozone shares which weren’t helped by French politicaluncertainty. Chinese shares got a boost from more stimulus.
• Australian shares did well in anticipation of stronger profits and rate cuts ahead but underperformed with China worries and no rate cut.
• Government bond returns were constrained by smaller than expected rate cuts and worries about Trump’s policies driving higher inflation.
• Real estate investment trusts saw solid returns in anticipation of better commercial property returns ahead.
• Unlisted assets were constrained by the valuation effect of high bond yields with office property seeing losses from reduced space demand.
• Australian home prices rose with the housing shortfall, but “high” rates saw gains stall into year end with prices falling in several cities.
• The $A fell but mainly against the $US, with the latter rising on Trump’s tax cut, deregulation and tariff plans.
• Reflecting all this, balanced super funds had very strong returns forthe second year in a row. They were roughly double our expectations!

The key threats for 2025

Just as was the case for 2024 the worry list for 2025 is long and maybe even more threatening given the uncertainty Trump’s policies pose:

• Share valuations are less attractive, with the key US share markettrading on a 26 times forward PE and the earnings yield bond yield gap is negative. Australia is not so bad at 20 times but it’s not cheap.
• Uncertainty remains around how much the Fed, the RBA and some other central banks will cut rates as core inflation is still not at target.
• Bond yields could continue to rise on the back of Trump’s tax cut and tariff policies, placing pressure on shares.
• The risk of recession remains, particularly in the US if rising bond yields prevent a recovery in manufacturing and housing and in Australia if the RBA leaves rates too high for too long.
• A global trade war in response to Trump’s threatened tariffs could add to this risk particularly in Europe and Asia.
• Risks for the Chinese economy are high and could be amplified as Trump ramps up tariffs & if Chinese policy stimulus remains modest. There are signs of bottoming in China’s property market though.
• Geopolitical risk is high: “maximum pressure” from Trump to resolve the war in Ukraine and Iran’s nuclear aims could see the Ukraine and Middle East wars getting worse before they get better threatening higher oil prices; similarly tensions with China could escalate; politicaluncertainty will likely be high in Europe with issues around the French budget and another potential election and a German election in the first half (although the latter is likely to be benign with the centre right Christian Democrats likely to “win”); and the Australian election is due by May although it’s unlikely to lead to a radical change in economicpolicy but does run the risk of even more public spending.

These considerations point to at least a high risk of increased volatility after the relative calm of 2024.

Reasons for optimism in 2025

However, despite these worries there are several grounds for optimism. First, inflation is likely to continue to trend down as labour markets are continuing to ease, demand growth is still slowing and commodity prices are in a mild downtrend from their 2022 high.

Second, central banks are likely to continue cutting interest rates. This is likely to range from the Fed which will become more gradual and cut to around 3.75% to the ECB which is likely to cut to 1.5% (partly to offset the negative impact of a possible trade war and political uncertainty in France). This is expected to include the RBA where quarterly trimmed mean inflation is likely to soon drop to around 0.6-0.7%qoq (or 2.4-2.8% annualised), enabling it to possibly start cutting in February but by May at the latest taking the cash rate down to 3.6% by year end.

Third, global growth is likely to slow in 2025 but only to just below 3% with US growth around 2.5% helped by optimism on Trump’s policies, Chinese growth around 5% with more stimulus offsetting a potential trade war with the US and Japanese and European growth around 1%. Global growth is likely to strengthen in the second half helped by rate cuts. Australian growth is likely to edge up to 1.8% helped by rising real wages, tax cuts & rate cuts and this should see profit growth return.

 Fourthly, if recession does occur it’s likely to be mild as most countries including Australia have not seen a spending boom that needs to be unwound and traditionally makes recessions deep. And the Chinese government is likely to continue to do just enough to keep growth around the 5% level. Currently global business conditions surveys are still around levels consistent with okay global growth.

Implications for investors

In the absence of a tried and tested process, trying to time the market, ie, selling before falls and buying ahead of gains is very difficult. Many of the mistakes referred to above kick in and it can be a sure way to destroy wealth. Perhaps the best example of this is a comparison of returns if the investor is fully invested in shares versus missing out on the best days. Of course, if you can avoid the worst days during a given period you will boost your returns. But this is very hard and many investors only get out after the bad returns occur, just in time to miss out on some of the best days and so hurt their returns. If you were fully invested in Australian shares from January 1995, you would have returned 9.5% pa (including dividends but not allowing for franking credits). But if by trying to time the market you miss the 10 best days the return falls to 7.5% pa. If you miss the 40 best days, it drops to just 3.5% pa. Hence, it’s time in the market that’s the key, not timing the market. The last two years provide a classic example of how hard it is to time markets – there has been a long worry list, so it’s been easy to be gloomy but timing markets on the back of this has been a loser as shares put in strong gains.

Just as trees don’t grow to the sky, 20% plus returns from global shares are not sustainable. So, we expect good investment returns over 2025, but it will likely be a rougher and more constrained ride than in 2024.

• Global and Australian shares are expected to return a far more constrained 7% in the year ahead. Stretched valuations after twostrong years, the ongoing risk of recession, the likelihood of a globaltrade war and ongoing geopolitical issues will likely make for a volatile ride in 2025 with a 15% correction somewhere along the way highlylikely. But central banks still cutting rates with the RBA joining in andprospects for stronger growth later in the year supporting profits should still see okay investment returns.
• Expect the ASX 200 to end 2025 at around 8,800 points.
• Bonds are likely to provide returns around running yield or a bit more, as inflation slows to target, and central banks cut rates.
• Unlisted commercial property returns are likely to start to improve next year as office prices have already had sharp falls in response to the lagged impact of high bond yields and working from home.
• Australian home prices are likely to see further weakness over the next six months as high interest rates constrain demand and unemployment rises. Lower interest rates should help from mid-yearthough and we see average home prices rising by around 3% in 2025.

The main things to keep an eye on are: interest rates; recession risk; a likely trade war; China’s property market; and the Australian consumer.

Conclusion

We wish all our clients a Merry Christmas and hope you take time to rest from our busy lives. Last Christmas, I warned of extra volatility, but great news—I was wrong! This year, we still expect some volatility. However, as interest rates decrease to stimulate a slowing economy, financial markets usually rise. As always, stick to the strategy we’ve built for you and ride the ups and downs, as over time, the ups outweigh the downs.

We look forward to guiding you through 2025 and beyond!

Bill Bracey
CEO & Founder of Sydney Financial Planning

What investment strategies are right for you?

Arrange a meeting with one of our Financial Planners to help avoid common investment mistakes, either book a meeting or get in contact with us on 02 9328 0876.

This article was prepared by Dr Shane Oliver with opening and closing summary by William Bracey – CEO & Senior Financial Planner from Sydney Financial Planning. Dr Shane Oliver who provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Sydney Financial Planning Pty Ltd (ABN 29 606 413 254), trading as Sydney Financial Planning & Illawarra Financial Planning is an Authorised Representative & Credit Representative of Charter Financial Planning Limited, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information. If you no longer wish to receive direct marketing from us you may opt out by contacting Sydney Financial Planning . You may still receive direct marketing from AMP as a product issuer, bringing to your attention products, offerings or other information that may be relevant to you. If you no longer wish to receive this information you may opt out by contacting AMP on 1300 157 173.

Introduction

Share markets have seen big falls on the back of rising recession fears. For the last two years there has been constant fears of a recession – or a contraction in economic activity – on the back of central bank rate hikes. With it failing to materialise and inflation falling enabling central banks to pivot to rate cuts many thought it would be avoided, and shares surged to record highs into July. However, recession fears are now back with a vengeance, particularly in the US, so share markets have fallen sharply from their highs – with the key direction setting US share market down 8.5% and global shares off 8.9% and Australian shares having a 5.7% fall from its high last week. The following week the share markets fully recovered and did a complete turnaround recovering all losses. Volatility!

More US recession indicators flashing red

The basic argument for recession over the last two years is that the most rapid monetary tightening in major countries in decades and cost-of-living pressures would depress spending driving a recession. Indeed, the Eurozone, UK and Japan have seen growth stall or arguably have had mild recessions over the last 18 months and Australia is already in a “per capita recession” (with falling GDP per person) even though GDP has still been rising. But the US economy has been robust, and this has kept the key direction setting US share market strong until recently. However, while the US economy has been stronger than expected, the risk of recession never fully went away, with key indicators highlighting ongoing recession risk. In particular:

There is nothing new here. And with global growth running around average levels, business conditions indicators remaining solid and US growth still strong many concluded the recession indicators just got it wrong. However, the resilience in economic growth could have just been due to (what Milton Friedman long ago called) the “long and variable lags” with which monetary policy impacts economic activity. And the impact of rate hikes was stretched out this time by the reopening boost from the pandemic, household saving buffers built up in the pandemic and strong labour markets partly reflecting a shortage of workers.

These supports are now fading. Weakening US jobs data suggest that it may indeed have been long lags at work. US job openings and people quitting for new jobs have been falling for some time now. Initially this may have been benign as slowing labour demand just pushed down job openings (and wages growth) but with unemployment remaining low.

Based on this a US economist named Claudia Sahm observed that whenever the 3-month moving average of the unemployment rate rises by 0.5% above its prior 12 month low a recession has been underway. This has become known as the Sahm Rule and it was triggered by July jobs data in the US on Friday with unemployment spiking to 4.3%, up from a low of 3.4%. It can be seen at work in the next chart. It has a perfect track record, but relationships that work in the past don’t always work in the future and it may have been distorted by a lumpy 420,000 rise in the labour supply in July.

What about Australia?

Leading indicators of Australian economic growth have not been as weak as those in the US. However, there are several reasons for concern that Australia may follow the US. We put the risk of recession here at 50%:

• Interest rates have gone up by more in Australia than in the US as measured by the mortgage rates people actually pay.
• Household debt servicing costs are now at a record share of household income in Australia (which is not the case in the US), and Australia has far more overvalued housing than in the US.
• Australian real household spending has slowed to a crawl.
• The boost to Australian economic growth from record population growth looks set to slow over the year ahead by at least one percentage point. This will more than offset the boost from tax cuts.

Have central banks, including the RBA, got it wrong?

The global monetary policy easing cycle is now underway. However, while lower interest rates are good for shares, this is less so initially in a recession and share markets are signalling increasing concern central banks may have left it too late. Central banks, including the RBA, may not have allowed enough for the “long and variable lags” with which rate hikes impact growth and inflation and so overtightened or left rates too high. This has likely been made worse by the pause in progress getting inflation down over the last six months in the US and then in Australia. Because central banks never know when they have raised rates enough to control inflation they often go too far – resulting in recession. This was the case prior to recessions in Australia in the early 1980s and 1990s. While the RBA still faces inflation that’s too high, given the US experience it should now be giving consideration to a cut in interest rates as it now risks much higher unemployment and inflation falling below target.

Bill’s Conclusion

Over the past 18 months, my previous newsletters have highlighted the expectation of increased volatility. We are witnessing it now. Two weeks ago, Warren Buffett sold half of his Apple shares, causing the US share market to drop by 5% over a few days. It then fully recovered as the nervous investors sold, and the smart money bought at a 5% discount. I never like paying full price for anything, and neither should you.

Be prepared for more volatility as our economy starts to slow down, with elections coming up in the US soon and in Australia next year. Interest rates will need to decrease to stimulate the economy. This is beneficial for the share market because, as interest rates go down, share markets generally go up. However, lower interest rates indicate a slowing economy, which is evident in Australia, the US, and China.

In conclusion, be aware that we are heading for increased volatility. Remember, don’t panic; instead, look for opportunities to buy at lower prices. As an advised client, your portfolio has been prepared for such outcomes.

Volatility is a normal, but uncomfortable, it’s part of the economic cycle. The key is not to try to time the market but to maintain a well-managed, well-diversified, and well-advised strategy and portfolio.

Be sure to consult with your adviser!

Remember “Be fearful when others are greedy and be greedy when others are fearful.” – Warren Buffet aged 93

Still the smartest investor I look up to.

Bill Bracey
CEO & Founder of Sydney Financial Planning

Will your investment strategy weather the expected volatility?

Speak with one of our Financial Planners about the best approach for your circumstances, either book a meeting or get in contact with us on 02 9328 0876.

This article was prepared by Dr Shane Oliver with opening and closing summary by William Bracey – CEO & Senior Financial Planner from Sydney Financial Planning. Dr Shane Oliver who provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Sydney Financial Planning Pty Ltd (ABN 29 606 413 254), trading as Sydney Financial Planning & Illawarra Financial Planning is an Authorised Representative & Credit Representative of Charter Financial Planning Limited, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information. If you no longer wish to receive direct marketing from us you may opt out by contacting Sydney Financial Planning . You may still receive direct marketing from AMP as a product issuer, bringing to your attention products, offerings or other information that may be relevant to you. If you no longer wish to receive this information you may opt out by contacting AMP on 1300 157 173.

Introduction

Happy New Year, it’s the 35th year I’ve been sending this opening year economic outlook, each additional year of experience providing me greater perspective on how investment markets behave and what successful clients need to do to build wealth.

Simply put, clients need the right financial plan and strategy, holding only quality assets, coupled with the right Financial Planning firm who deliver on their promises, who coach you to ride the storms out and provide a yearly review to measure and acknowledge progress and reset for the following year.

This time last year, I warned clients to expect higher volatility, and we sure got that right! I also noted that once interest rates start to fall share markets will rebound, then later followed by the property market. Sounds easy, but you need to hold your nerve!

Now its slowly starting, these things take time to flow through, there is always volatility, but it will reduce in time. Those who don’t have a trusted financial planner to guide them through the cycles never seem to build wealth, as they continue to make terrible emotional financial decisions that destroys wealth.

Can the rebound continue or will markets have a rough year? Here is a simple point form summary of key insights and views on the outlook.

Five key themes from 2023

• Stronger than feared growth. Despite fears recession was inevitable, on the back of rate hikes, it’s been avoided so far, helped by saving buffers, reopening boosts and some labour hoarding.
• Disinflation. Inflation across major countries fell from peaks of 8 to 11% in 2022 to around 3 to 5% as supply pressure and demand eased.
• Peak interest rates. Most major central bank policy rates look to have peaked and this probably includes the RBA’s cash rate.
• Geopolitical threats proved not to be as worrying as feared.
• Artificial intelligence hit the big time after the launch of Chat GPT. Thishelped tech stocks (mostly US) tech stocks reverse their 2022 slump.

Five lessons for investors from 2023

• Monetary policy still works in controlling inflation – the lags may be long and variable but this time was not really different. Of course, an easing in supply chain disruptions helped and there is still a way to go.
• Don’t ignore population growth – a surge in immigration played a big role in pushing home prices back up and avoiding recession in Australia.
• Timing markets is hard – it was easy to be gloomy a year ago with a long worry list and shares plunging into October but timing markets on the back of this was a loser as shares surged, putting in strong returns.
• Geopolitics matters – but it’s hard to predict (eg, Hamas’ attacks on Israel) and the impact can often be less than feared, with the world learning to live with the war in Ukraine and the Israel/Hamas war not (yet) causing a surge in oil prices.
• Turn down the noise – investors are being hit with often irrelevant, low quality & conflicting information which boosts uncertainty. The key is to turn down the noise and stick to a long-term strategy.

The three big worries for 2024

• Inflation is still too high and its decline is likely to remain bumpy – so central banks could still have another hawkish turn and even if not there is a high risk that rate cuts may come later than markets expect.
• The risk of recession is high. It’s hard to see the biggest rate hiking cycle since the 1980s not having a major impact and the risks are already evident in tighter US lending standards, falling lending in Europe and stalling consumer spending in Australia. Risks around the Chinese economy and property sector also remain high.
• Geopolitical risk is high: with half the world’s population seeing elections including the US, EU & India; the US Government could have a shutdown starting 19 January & could have another divisive Biden v Trump presidential election; the result of Taiwan’s 13 January election could see an easing or an escalation of tensions with China depending who wins; the war in Ukraine is continuing; and there is a high risk the Israel/Hamas war could spread, threatening oil supplies, particularly with Iran’s proxy Houthi rebels disrupting Red Sea shipping.

Four reasons for optimism

• Inflation has eased sharply to around 3% in major industrial countries and around 5% in Australia and is likely to continue to fall as: supply chain pressures have eased; demand is cooling; and labour markets are easing. This includes in Australia which lagged US inflation on the way up and is just doing so again on the way down.
• We expect the ECB to start cutting rates in March, followed by the Fed and BoC in the June quarter. While there is still a high risk of one more hike in Australia in February, falling inflation should head this off so our base case is that the RBA has peaked ahead of rate cuts from June, taking the cash rate down to 3.6% by year end. Just as rate hikes were bad for shares in 2022, rate cuts should ultimately be positive.
• While recession is a high risk and markets are no longer priced for it, if it does occur it should be mild: most countries have not seen a spending boom that needs to be unwound; in Australia consumer spending, housing investment and business investment are not running at excessive levels relative to GDP; and Chinese growth is soft and property sector risks are high, but it’s likely to target roughly 5% GDP growth again and back this up with fiscal stimulus if need be.
• Finally, while there’s lots of geopolitical risks they may not turn out so badly: the US has a strong incentive to avoid an escalation in the Israel/Hamas war; the Ukraine war could turn into a frozen conflict; & elections won’t necessarily go in an adverse direction for markets. In relation to the US, the presidential election year normally sees average share returns and Trump could falter before the election.

Key views on markets for 2024

Easing inflation pressures, central banks moving to cut rates and prospects for stronger growth in 2025 should make for okay returns in 2024. However, with growth still slowing, shares historically tending to fall during the initial phase of rate cuts, a very high risk of recession and investors and share market valuations no longer positioned for recession, it’s likely to be a rougher and more constrained ride than in 2023. We expect balanced growth super funds to return positively and in line with benchmarks this year.

• Global shares are expected to return positively and in line with benchmarks. The first half could be rough as growth weakens, but shares should ultimately benefit from rate cuts and lower bond yields and the anticipation of stronger growth later in the year and in 2025.
• Australian shares are likely to outperform global shares, after underperforming in 2023 helped by somewhat more attractive valuations. A recession could threaten this though so it’s hard to have a strong view. Expect the ASX 200 to end 2024 well ahead of the start of the year.
• Bonds are likely to provide returns around running yield or a bit more, as inflation slows, and central banks cut rates.
• Unlisted commercial property returns are likely to be negative again due to the lagged impact of high bond yields & working from home.
• Australian home prices are likely to fall slightly as high rates hit demand & unemployment rises. The supply shortfall should prevent a sharper fall & expect a wide dispersion. Rate cuts will help later in the year.
• Cash and bank deposits are expected to provide returns of over 4%.
• A rising trend in the $A is likely taking it above $US0.70, due to a fall in the overvalued $US and the Fed cutting rates more than the RBA.

Five points on Bitcoin

• Bitcoin rose 157% through 2023.
• However, this followed a 64% fall in 2022, so it remains very volatile.
• It and other crypto currencies remain highly geared to US shares and expectations for interest rates – explaining its sharp fall in 2022 when shares fell and rates rose and rebound with shares in 2023.
• Bitcoin is yet to find a clear use (beyond as something to speculate in) making it very hard to value fundamentally – unlike, say, property which provides rents and shares which provide earnings. Recent gains owe partly to excitement around this year’s “halving” (in the amount of Bitcoin that miners receive) and anticipation of an exchange traded fund that can invest in Bitcoin – rather than developments in its use.
• There is value in blockchain technology (for decentralised finance, contracts, etc) which is positive for cryptocurrencies like Ethereum, but this is hard to value.

Five things to watch

• Inflation – if it fails to continue falling as we expect, central banks will be more hawkish than we are allowing for, risking deep recession.
• Recession – a mild recession should be manageable but a deep recession will mean significant downside in shares.
  So far global business conditions PMIs are soft but consistent with okay growth.

Nine things investors should remember

• Make the most of compound interest to grow wealth. Saving regularly in growth assets can grow wealth significantly over long periods.
• Using the “rule of 72”, it will take 16 years to double an asset’s value if it returns 4.5% pa (ie, 72/4.5) but only 9 yrs if the asset returns 8% pa.
• Don’t get thrown off by the cycle. Falls in asset markets can throw investors of a well-considered strategy, destroying potential wealth.
• Invest for the long-term. Given the difficulty in timing market moves, for most it’s best to get a long-term plan that suits your wealth, age and risk tolerance and stick to it.
• Diversify. Don’t put all your eggs in one basket.
• Turn down the noise. This is critical with the information overload coming from social and mainstream media, with plenty of clickbait.
• Buy low, sell high. The cheaper you buy an asset, the higher its prospective return will likely be and vice versa.
• Avoid the crowd at extremes. Don’t get sucked into euphoria or doom and gloom around an asset.
• Focus on investments you understand offering sustainable cash flow. If it looks dodgy, hard to understand or has to be justified by odd valuations or lots of debt, then stay away. There is no free lunch!
• Seek advice. Investing can get complicated and its often hard to stick to a long-term investment strategy on your own.

Closing Summary

So, in closing its remains critically important to continue to review your strategy every year, as everything in the world continues to change, you just may not be able to see it from where you are.

Make sure when we reach out to you via our new Calendly review booking system you lock in a meeting time.

Time will not stand still, nor will your wealth creation strategy needs.

Bill Bracey
CEO and Founder

Will your wealth creation strategy stand the test of time?

Speak with one of our Financial Planners about the best approach for your circumstances, either book a meeting or get in contact with us on 02 9328 0876.

This article was prepared by Dr Shane Oliver with opening and closing summary by William Bracey – CEO & Senior Financial Planner from Sydney Financial Planning. Dr Shane Oliver who provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Sydney Financial Planning Pty Ltd (ABN 29 606 413 254), trading as Sydney Financial Planning & Illawarra Financial Planning is an Authorised Representative & Credit Representative of Charter Financial Planning Limited, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information. If you no longer wish to receive direct marketing from us you may opt out by contacting Sydney Financial Planning . You may still receive direct marketing from AMP as a product issuer, bringing to your attention products, offerings or other information that may be relevant to you. If you no longer wish to receive this information you may opt out by contacting AMP on 1300 157 173.