Latest News from Newealth

12 Jul 2019

Friday Tidbit

We are pro-business but don’t understand.

How can any business justify paying one single employee US$129.4m for one year of work.

Something must be broken when by comparison an average income of US$75,000 per annum equates to only US$3m after 40 years of work.

The Board of Directors is responsible for this outcome.

The Board of Directors represent the shareholders that own and invest in the business (us) and it is they that approve the remuneration policy of the Chief Executive Officer.

Again, don’t understand.

Click for numbers.

 

10 Jul 2019

Behavioral Finance: Momentum Investing

As Benjamin Graham taught, you are not right because the Mr Market agrees with you, you are right because your numbers are right.

Even intellectual geniuses such as Sir Isaac Newton can get completely caught up with the emotion of investing and blow up their portfolio.

WARNING, chasing higher and higher prices is no guarantee of future return.

Click to read.

For investors, the key is to remain invested according to your appetite for volatility and when fear and panic take hold during the next financial catastrophe, to take advantage by buying more quality assets at discounted prices.

 

4 Jul 2019

Interest Rates: How long can rates remain low?

History tells us that rates (using US long term government bond yields as a proxy) can remain low for decades at a time.

Click for chart.

The biggest impediment to rising interest rates is the quantum of debt and this has not changed for over a decade.

In January 2019 Bloomberg published an estimate of total global debt at US$244 trillion across households, corporations and governments which is more than 3 times the size of the global economy.

So, can growth assets prices (for property and shares) still go higher from here?

Yes is the answer but don’t trick yourself into thinking that a financial catastrophe will not follow.

Financial catastrophes (such as stock market crashes which are defined as a fall of more than 20% from recent peak) are never a question of if but when.

For investors, the key is to remain invested according to your appetite for volatility and then, when fear and panic take hold during the next financial catastrophe, to take advantage by buying more quality assets at discounted prices.

 

2 Jul 2019

US China Trade War: Greater Bay Area

China’s Greater Bay Area (GBA) currently has 67.1 million people which will help volt the GBA forward in terms of economic development and expansion.

A big population base plus China’s ongoing mass infrastructure building can only serve to drive its future economic expansion.

Do not see how US tariffs will stop this momentum over the medium or long term because China will just continue to strike new international trade deals.

Click to read.

 

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