MDA Newsletter - End of December 2018

Was the last 3 month of 2018 a sign of things to come? or a buying opportunity?

The last 3 months of the year saw a real downturn in the Australian and Global markets. What was shaping up for a decent year of returns for your super and investments ended up seeing the first negative returns for a calendar year in quite a few years.

So what does 2019 hold for us then? most of the issues that caused the downturn late last year are still around, so my view is that for the next 3 months to expect more of the same. That is volatility, wild swings either up or down based on the news of the day.

Longer term, I remain positive.

The feared recession of 2020 in the US (honestly, who can accurately predict a recession 2 years in advance?), can be managed. The Fed reserve can cut interest rates if needed, unemployment rates are very low and inflation is where it should be. I think a US and global slowdown is on the cards, but not a deep recession as some believe. A recession seems to be priced into the markets, so anything other then that should see a positive lift in sentiment and global markets.

The oil price has also come down significantly in the last few months, this is generally a good tailwind for consumer spending. Its not usually good for stock markets short term, but acts a lot like a tax cut to individuals, so generally positive.

Interest rates around the world are generally now off their all time lows. This gives the ability to slow increased or even cut rates to boost the economy.

So generally my view is positive. Some variables that could derail this are the usual risks that we are all accustomed to - Donald Trump, Our sky high house prices and federal elections.

In other news, over the coming weeks we are realigning our portfolios for you. A few changes to fund manager pricing has given us the opportunity to reduce overall costs to your super and investments whilst maintaining our ability to properly manage asset allocations. A number of individual managed funds will be replaced by a lower cost muti-manager index fund. To compliment this, a few key funds will be retained to diversify holdings and make tactical bets on certain asset classes. Overall a simpler, cheaper way of manageing our MDA portfolios.

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