As he prepares for retirement, a Chief Investment Strategist from a major global fund manager summarises what he has learned working through five full business cycles. He says it’s time to take risk off the table.
While financial solutions to longevity are worth pursuing, it is more important to educate people on what the late-stages of life are likely to deliver, and the time to prepare is now.
Two tenets of a successful investment philosophy: risk is the permanent loss of capital, and never succumb to either irrational exuberance or unjustified gloom. It takes discipline and strict adherence.
Appointing an enduring Power of Attorney is one of those administrative tasks we often overlook, but it becomes increasingly important as we age. Make sure the attorney understands your needs.
With the availability of large pools of retirees, the law of large numbers will start to see a predictable distribution of lifespans around the mean, allowing for longevity risk products. An important development.
Bonds have performed well for most of the last 30 years with a tailwind of easing liquidity, but the current high prices makes them vulnerable to losing their protective qualities.
An efficient diversified portfolio might include unfamiliar assets with short-term volatility. It’s important to focus on a comfort level to attain the long-term benefits of diversification in a portfolio.
The Royal Commission focusses heavily on poor incentives amid a sea of damnation and exhaustively-documented case studies, but does not provide answers, especially on the vexed issue of best interests.
APRA’s letter to super funds highlights concerns about ‘cash’ investments. A lack of understanding might haunt investors when the next downturn comes as too many people forsake protection for yield.
Value and contrarian investors often buy shares in companies rejected by the market, which makes it the hardest way to invest. It looks great when it works but idiotic when the market continues to disagree.
Before the GFC, many experienced market professionals forgot about risks such as liquidity, and did not do the research needed to minimise the problems. It will all happen again.
Investment solutions that were once only available to the big end of town are now available to anyone willing to learn the same lessons, research the available products and try some new approaches.
Fund managers are commonly using algorithms to derive and implement their investment strategies, and investors should be looking behind and beyond the computer code to understand the inputs.
High debt, wealth inequality, increasing automation, ageing population, and climate change are among the most significant structural headwinds the global economy faces today. What could this mean for equity investors?