Equity markets have bounced well over 20% since the lows just over a month ago, so technically we are already in a new bull market.
With peak new cases now behind us, the economy agitating to reopen and governments starting to ease restrictions, is the massive fiscal and monetary stimulus in the pipes about to prove the bulls spectacularly right?
During market downturns, investors are commonly advised to stick with their strategic asset allocation rather than crystalise their losses in the hope that the downturn will be short lived and that returns will revert to historical norms.
The purpose of any advice business is to help its clients to achieve what they want to achieve. So, why is talking about goals-based advice seen as being 'different' from what financial planners have always done?
Sequencing risk is one of the most important things to consider when constructing your investment portfolio.
The premise of Goals Based Investing is to focus each investment portfolio on specific individual personal and lifestyle goals. Those goals inform the right timeframe, risk and return parameters, which in turn determine the best asset allocation and investment mix. Goals can be short-term, such as taking a holiday, medium-term, such as renovating or paying school fees, and long-term, such as saving for retirement.
Let us examine what happens when the clear and present danger from the coronavirus meets the global asset bubble, your portfolio and the industry standard investment approach. This is no small issue because – contrary to a market consensus – the coronavirus (COVID-19) is actually a real threat to complacent equity markets and client portfolios. It is a global health pandemic which requires active management in the real world, and which should also be risk managed by your adviser or super fund. The coronavirus and its real-world management should not simply be dismissed as just another flu, and could even be the catalyst which bursts the global asset bubble.
Nearly 20 years after the last technology bubble, we’re in funny season again, and you don’t need to be an economics PhD to see it. Crazy valuations are being ascribed to stocks that have never made a dollar, in the hope they’ll become like Amazon one day. Think loss making stocks being priced on huge multiples of revenue implying that strong growth will continue for many many years in an otherwise low growth market. There is indeed a growing growth bubble in the ‘bubble in everything’.
An alternative investment is an investment product other than traditional investments such as stocks, bonds or cash.
In this episode, we speak to Matthew Walker from Dynamic Asset about Dynamic Asset Allocation, Goals Based Investing and the Association of Goals Based Advice.
The recent equity market rally in response to dovish FED language again highlights how dependent equity markets are on government stimulus and sugar hits.
