How will the US election impact my investments?

With any change comes uncertainty, volatility, concern.  There is going to be a change in the US due to the current President not being eligible for re-election.  The choices?  Trump or Clinton?

Keeping in mind that there will be issues either way, we need to keep in mind that which is important, which is NOT the hype or controversy.  Your investments should be in companies that will still be around tomorrow, and the next day.  Yes the price will jump around a bit for a while, but standing still is often the only answer when everything is swirling around you.  Take the time to wait, to ponder, to be confident that you have made the right choices for you in the long term, 5-10 years, do not worry about the first 10 minutes of the news.

Here is what Bloomberg had to say on the matter:

Don’t Worry When the Stock Market Goes Crazy After the Election

By Oliver Renick – 7/11/2016, 6:00:01 PM

In the hours after the president is elected, equity investors need to brace for volatility. What they shouldn’t do is panic.

That’s because regardless of how prices react on Nov. 9, next-day moves in the S&P 500 Index are useless in telling what comes after. While the index swings an average 1.5 percent the day after the vote, gains or losses over the first 24 hours predict the market’s direction 12 months later less than half the time.

This matters because the compulsion to act in the vote’s aftermath is often very strong — stocks swing twice as violently as normal those days, data compiled by Bloomberg show. They plummeted 5 percent just after Barack Obama beat John McCain in 2008. But while nothing says Wednesday’s reaction won’t be a harbinger for the year, nothing says it will, either, and investors should think before doing anything rash.

“Trying to trade that is very difficult,” said Thomas Melcher, the Philadelphia-based chief investment officer at PNC Asset Management Group. “Even if the market sells off, if you have any reasonable time horizon, that should be a buying opportunity. The dust will settle and people will conclude the economy is OK.”

In the 22 elections going back to 1928, the S&P 500 has fallen 15 times the day after polls close, for an average loss of 1.8 percent. Stocks reversed course and moved higher over the next 12 months in nine of those instances, according to data compiled by Bloomberg.

Nothing shows the unreliability of first-day signals more than the routs that accompanied victories by Obama, whose election in the midst of the 2008 financial crisis preceded a two-day plunge in which more than $2 trillion of global share value was erased. It wasn’t much better in 2012, when Election Day was followed by a two-day drop that swelled to 3.6 percent in the S&P 500, at the time the worst drop in a year.

Of course, Obama has been anything but bad for equities — or at least, he hasn’t gotten in their way. The S&P 500 has posted an average annual gain of 13.3 percent since Nov. 4, 2008, better than nine of the previous 12 administrations. Data like that implies investors struggle to process the meaning of a new president just after Election Day, or infuse the winner with greater influence than they have.

“Some people are probably going to overreact, and there will be other investors trying to second-guess what those investors are doing,” said David Brown, a professor of finance at the University of Wisconsin School of Business, in Madison, Wisconsin. “There is a salience of short-term events, particularly bad events, that lead people to react to short-term information.”

Swings in industries are no more prescient than the broader market. The S&P 500 Health Care Index declined 3.6 percent the day after Obama first won; since then it’s the stock market’s third-best performing group with a 149 percent advance. Also meaningless is the victor’s party. The median S&P 500 gain in Democratic terms since 1928 has been 27.7 percent, according to Leuthold Group LLC, compared with 27.3 percent under Republicans.

“The results suggest that policy differences between the parties are either fully reflected in stock prices by the time a candidate officially takes office, overwhelmed by larger cyclical forces, or fundamentally indistinguishable from one another,” said Doug Ramsey, the firm’s chief investment officer. “In practice, all three factors are likely at work.”

Infusing certain days and events with special meaning is a tradition on Wall Street, with everything from Santa Claus to the Super Bowl supposedly holding influence for share prices. Lots of people believe the direction of equities on Jan. 1 contains insights into how the year will go in stocks, but the system has n o more predictive value than a coin toss.

Letting emotions rule investment decisions was a temptation that Erik Davidson resisted after the Brexit vote. On June 24, as the S&P 500 was plunging 3.6 percent on concern Britain’s vote would snarl trade and spur a global recession, the chief investment officer of Wells Fargo Private Bank said in a Bloomberg News story the selloff was a buying opportunity as investors overestimated the pain. Stocks are up 2.3 percent since he spoke.

“The markets could sell off if Trump wins, like we saw with Brexit, but we also saw how markets recovered,” said Davidson. “If Donald Trump is in office, it’s a concern, but there are so many other things that are going well and starting to turn the corner.”

That doesn’t mean it’ll all be smooth-sailing for stock investors. Equity volatility in the November of presidential election years has historically been 22 percent above the average for all months, according to data compiled by Bloomberg going back to the Herbert Hoover administration.

Since the outlook for rates and equities has lately been joined at the hip, that may be of interest to traders who are all but certain the Federal Reserve will hike rates in December. Since 1930, the S&P 500 has an average 30-day realized volatility of 19.2 in election-year Novembers, more than 20 percent higher than the historical average of 15.7.

Should the past prove to be prologue and volatility rise, the ride may seem even bumpier given the market’s current placidity. The S&P 500’s 30-day volatility registered at 16.8 on Monday, 55 percent below the average of all November months — both in and out of election years.

“It’s fair to say no one knows what these candidates’ policy prescriptions are going to be and that uncertainty will resonate into volatility,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors, which oversees $1.5 billion in assets in Oklahoma City.

Regulator, retirement office flatline in budget; NZ Super down $32 billion on model

Copied from: investmentnews new zealand

May 25, 2015

Both the Financial Markets Authority (FMA) and the Retirement Commissioner face zero-growth balance sheets for at least next year, according to Treasury budget details.

Despite taking on a greater workload due to the implementation of the Financial Markets Conduct Act (FMC), the government has funded the FMA for the 2015/16 fiscal year at the same level as the previous period: $26.184 million.

That amount is split as per the 2014/15 year with just over $12.5 million to cover “licensing and compliance monitoring”, almost $8 million allocated to corporate cop legwork, and, more than $5.6 million to pay for “market analysis and guidance, investor awareness, and regulatory engagement functions”.

The budget statement says the FMA “is rewriting their Statement of Intent and Statement of Performance Expectations to reflect increased responsibilities under the Financial Markets Conduct Act 2013”.

“Some of the performance information indicated for the appropriation may change during the year,” the budget paper says.

Similarly, the government will back the FMA’s litigation fund to last year’s tune of $2 million. The regulator’s legal fighting fund is designed to cover “costs and expenses arising from litigation between the FMA and another party involving external legal counsel and/or consultants and expert witnesses, with direct costs of at least $10,000 (GST excl), excluding FMA overheads”.

The FMA website lists 11 cases currently before the courts.

Meanwhile, the Retirement Commissioner (now housed under the Commission for Financial Capability – or CFFC – banner) has seen its 2015/16 budget trimmed back from a temporary high of just above $6 million in the previous year to $5.782 million.

“There was a one-off transfer of funding from Vote Science and Innovation to develop financial literacy pilot programmes targeted to Māori and Pacific people, which increased the appropriation only for 2014/15,” the budget paper says. “The appropriation reverts back to baselines for 2015/16 and out years [until at least 2018/19].”

According to its 2014 accounts, the CFFC spent almost $1.8 million of its budget on staff and about $1.5 million on “marketing and education”.

The budget papers also project the New Zealand Superannuation Fund (NZS) would accumulate almost $32 billion more by 2060 if government contributions recommence in the 2015/16 tax period rather than the planned 2021 period.

Under the “normal contribution logic” scenario, the government would tip in funds annually to NZS from 2015/16 until 2029 when withdrawals are scheduled to begin. Based on those contribution parameters and assuming baseline returns and tax, by 2060 the NZS would’ve accumulated about $512 billion.

However, if NZS contributions kick off again in 2021, as indicated by the government, the 2060 fund tally would equate to about $480 billion, the budget projection says.

Ross Asset Management – Do you need to worry?

This is a tragic story of “if it sounds too good to be true it probably is”.  The PwC report is less than appealing to any of those investors who are learning through the media that they really have nothing left.

If you are a client of DecisionMakers I would like you to be assured that the steps we take ensure that your investments are HELD as safely as we can possibly make it.  Please read below and know that we work for you and will do our upmost to ensure that you will not suffer such a predictable and tragic loss such as this.

If you wish to read the full article from the Financial Markets Authority into the current status of Ross Asset Management click here.

Feature How fraud is minimised
Your money is held in a reputable custodial system that is operated by Aegis (Investment Custodial Services Limited), owned by the ASB Bank, or Oneanswer, owned by First NZ Capital Ltd.
 
I do not hold your money so cannot manipulate the values or abscond with it
Money withdrawn from the wrap platform can only be paid into your nominated bank account   I do not have any access to your nominated bank account. I cannot withdraw any money and siphon to an account of my choice
The custodian is subject to strict compliance standards and is externally audited   The external auditor would uncover any funds that have incorrect values ascribed to them by the custodian, plus uncover any unlawful transactions
The physical buying and selling of securities is undertaken via licensed share brokers who are subject to separate external compliance checks.    There are multiple checks and balances and stock exchange rules require prescribed behaviour and audit that would quickly uncover errant activity.
The value subscribed to each custodial security is checked daily by the custodian and is not a figure that I can insert   I cannot manipulate the reported values
All valuation reports are generated from within the wrap platform The calculations and values within the reports are not created by me. These are undertaken by the platform and custodian 
The majority of your investments are in managed funds which have their own custodian and auditor and the unit prices are checked by the research houses.    There are multiple external checks and balances to ensure the number of units held are accurate and that the unit price is correct.
Any additional contributions to the investments are paid directly to the custodian correct. No investment monies are paid to my bank account. The only money we receive is that legitimately authorised by you to be deducted by the custodian from your account and paid to me as adviser fees. 
The wrap platform will send directly to you an annual transaction report.  This will enable you to double check to see if there have been any unauthorised transactions

Getting ahead when it’s all going sideways – Brian Gaynor


Published in Brian Gaynor’s NZ Herald Articles on 23 Jun 2012

It is a difficult time for investors as they face record low interest rates, volatile sharemarkets and a plethora of negative news, particularly from Europe.

What is the best investment strategy in this environment? Is it bank deposits, fixed-interest securities, the sharemarket, residential property or other asset classes?

The past 40 years can be divided into three distinct periods:

* Between 1972 and 1982 the world economy suffered under rising oil prices, anaemic economic growth and flat or negative sharemarkets. The Dow Jones industrial average went from over 1000 at the end of 1972 to 770 in mid-1982.

* The 1982 to 2007 period was marked by a huge increase in global debt, strong world-wide growth and buoyant sharemarkets interspersed by short, sharp downturns. The Down Jones index went from 770 in mid-1982 to 14,280 at the end of 2007.

* The post-2007 period has been similar to the 1972 to 1982 years, but this time it is the excessive debt, rather than rising oil prices, that is spooking investors and the global economy.

The Dow Jones is at 12,570 and present conditions are expected to continue for several years.

The present situation is not as bad as it seems for equity investors because we are now in a stock pickers market and investors can generate high returns as long as they choose the best performing companies.

A research paper by Robert Hagstrom, a portfolio manager at Legg Mason Capital Management in Baltimore, supports this.

Hagstrom looked at the US sharemarket between October 1975 and August 1982 when the Dow Jones industrial average started and finished at 784. He found that over this period Warren Buffett’s Berkshire Hathaway achieved total investment returns of 676 per cent and Bill Ruane’s famous Sequoia Fund achieved 415 per cent.

Legg Mason looked at the performance of the 500 largest US listed companies between 1975 and 1982 and found that, on average, 16 of the 500 stocks doubled in any one year.

The research also revealed that, on average, the sharemarket returns of an amazing 38 per cent of stocks appreciated by 100 per cent or more over any five-year period between 1975 and 1982.

Thus, 190 of the 500 companies achieved investment returns above 100 per cent over these five years.

Hagstrom concluded that investors who focused on the Dow Jones index between 1975 and 1982 would have concluded that the market had moved sideways “when in fact the variation was dramatic and led to plenty of opportunities to earn high excess returns”.

It is important to note that Hagstrom believes high returns can be achieved through superior stock selection in sideways markets, rather than through trading. Read More

The Greek Elections, why are they so important?

When I woke up this morning the news was filled with what Greece were doing, which party will win will determine if austerity measures that secure their bailouts will be continued, hence the panic…

I have to admit to being quite put off by all this talk of Greece, that was until I checked my email on Saturday to discover an email from a favourite financial analyst entitled “The Bang! Moment is here”.  I have to say that he is not one usually taken to scare tactics, but the lack of ability for Greeks to choose a parliament is derailing efforts to keep the Euro floating.

Here is the crux of the situation:

We know that money is simply flying out of Greek banks. A number of them are clearly insolvent, yet they are meeting demands for withdrawals. Where is the cash coming from? The answer is in the form of yet another acronym from Europe, called the ELA. Is there a limit to this largesse? And politicians are becoming rather snarky (short-tempered, critical, testy, irritable, freaked-out – you fill in the word) with each other. This is what happens when crisis-weary politicians face yet another Greek tragedy, but this time perhaps it will hit even closer to home. Is there anyone left anywhere who has not grown tired of reading about Greece? I am tired of writing about them, yet if we are to understand the sturm und drang, the storm and stress, of Europe, we must begin there. Because, unlike Las Vegas, what happens in Greece most definitely does not stay in Greece.
John Mauldin, Thoughts from the Frontline, June 16, 2012.

As we wait on tender hooks, we must not think that this will not affect little ol’ NZ, we are very much part of the global community and instead of sitting on our laurels we need to find the opportunities that will present themselves for us to not only survive, but thrive.

Economic Stimulus: Investopedia Term of the Day

For APRIL 13, 2012


Economic Stimulus

What does it mean?

Attempts by governments or government agencies to financially stimulate an economy. An economic stimulus is the use of monetary or fiscal policy changes to kick start a lagging or struggling economy. Governments can use tactics such as lowering interest rates, increasing government spending and quantitative easing, to name a few, to accomplish this.


Investopedia says…

The term economic stimulus became an everyday economic term following the recession created by the 2008-2009 Credit Crisis, which caused most, if not all, of the world’s
Read more »

Copyright © 2012 – All rights reserved. Investopedia ULC

 

The sun is shining, the hail is falling…

Just as the weather seems to be a little confused at the moment ( it is Summer I think), it can be very confusing trying to make sense of all the reports in the media about the Eurozone.

The reality is that the problem stems from 80 years of overspending and that we will not solve these problems overnight.  But more than ever it appears the Eurozone has averted a catastrophe with a milder crisis. With Italy and Greece having a changing of the guard at the highest levels it seems that a more peaceful existence might start as the austerity measures kick in. Don’t get me wrong, for the countries involved directly (and those of use somewhat indirectly) the process to stability will be painful, in the pocket.

In saying that, here is a chance for those entrepreneurs with visions to look for the opportunities and exploit them, as investors, we want a chance to go along for the ride.  The problem with starting new ventures at a time such as this is that cash is required.  This cash must be derived from somewhere, and where else to find it but those with funds in the bank.

So here is the warning, lets not go back to finance company days when we take people’s word for gospel and only look to the “promised” returns.  Let us learn the lesson and ask for facts and figures that are real and see that the person and companies we invest in have a real and substantial stack in the venture and are not using your money to pay themselves out of their venture.

With new regulations in place I would hope that this can’t happen, but with very clever people using their talents for less than noble purposes I hope we can all look for the loopholes and recognise a good deal from a bad one.

“Look after the pennies and the pounds will look after themselves”

Although the weather is consistently inconsistent, I hope that we can all learn the lessons we needed to for a better world for the next generation, may they not have to pay for our excesses.

So… we have the same Prime Minister… so what has changed?

I have been asking around about what made people choose National, the main reply has been, “because there was no other choice for Prime Minister”.  I find this interesting considering that John Key has taken his voting glory to meant that we all agree to asset sales.  What is more difficult to understand though is why ACT (with less than 2% of the vote) has been granted a trial of one of their more controversial policies of “charter schools”.  Mr Key seems to be fully behind this, but what has brought this on?  I don’t remember that being in any of National’s policies before the election.

I guess we will have to wait and see what comes out of the proverbial woodwork when the Maori Party gets back to the National Party about their demands, if any.  But in the meantime, Peter Dunne has managed to save TVNZ 7 and National Radio.

How does this affect your investments?  We will have to wait to find out…

A blokey culture that costs the country… Sydney Morning Herald

A blokey culture that costs the country billions in wasted resources

William Pesek
October 8, 2011

Read more: Click here

Paul Hogan’s reptile-wrestling tough guy from the 1986 movie Crocodile Dundee typified Australia’s reputation for “mateship”, a creed of male friendship that often excludes women. A quarter of a century on, it’s costing the country billions.

Don’t take my word for it – take the Prime Minister’s. ”I’ve always thought the Australian culture is blokey,” Julia Gillard said last month. “It’s not acceptable to me in the modern age that we can look at boards of major corporations and not see one woman.”

Nor should it be to the men ruling over those corporate suites. If basic fairness won’t convince them, hit them with something harder to ignore: money. Women earn about 17 per cent less than men. Narrowing this gap by just 1 percentage point could boost gross domestic product by $4.4 billion, the Committee for Economic Development of Australia reports.

Australia’s economic boom is about the coal and iron ore it ships to China. Oddly, the nation’s executives aren’t mining the hidden resource of women. Unconscious or not, bias costs the $1.3 trillion economy as much as 13 per cent in lost annual production, Goldman Sachs estimates. Sexism is bad economics, and if it’s squandering growth in advanced, Western-thinking economies like Australia, you can just imagine how it’s affecting some Asian countries.

Take Japan. If its female employment rate matched the male rate – one of the highest anywhere at about 80 per cent – GDP would get a boost of as much as 15 per cent, Kathy Matsui, a Tokyo strategist at Goldman Sachs, estimated last year. South Korea has trouble with women, too. In 2010, it ranked a dismal 104th in a World Economic Forum report on the gap between men and women. It trailed the United Arab Emirates, Suriname and Azerbaijan. That’s quite a blemish on an otherwise successful economy (Japan ranked 94th).

South-east Asia’s record is mixed, given the diversity of cultures and living standards. Yet it also leaves room for improvement. The same goes for south Asia, which like south-east Asia has had its fair share of female leaders without commensurate gains in participation in corporate boardrooms or legislatures.

The Asian economies that tend to do best in equality analyses are the Philippines and Sri Lanka. Such rankings track progress on economic opportunity, education, politics, health and survival. It’s not that life is always great for women in the Philippines and Sri Lanka. To get ahead, all too many work abroad apart from families and send remittances back home. If that’s our definition of empowerment, we need to rethink it.

This sex gap undermines the quality of life of one-half of nations’ populations and poses risks to long-term growth and well-being of societies. For an economy to fully use only half its labour force is to tie a limb behind its back.

In this age of globalisation and fast-rising competition, it’s a wonder leaders don’t address this senseless imbalance.

Developing economies in Asia and the Pacific-island region are losing up to $47 billion annually because of women’s limited access to employment opportunities, and an additional $16 billion to $30 billion because of gender gaps in education, according to the Asian Development Bank.

That also goes for the most developed of nations, like Australia. It has only one female chief executive among its 30 biggest companies. At 8.4 per cent, Australia’s female board representation lags behind major English-speaking nations. The irony is that Australia is often an equality trailblazer. It fielded its first female political candidate in 1897, decades before most Western nations granted universal suffrage. It is enacting new passport rules allowing citizens to list their official gender as male, female or indeterminate, without having to undergo surgery as proof of a sex change.

Australia is also ending a 110-year ban on women serving in front-line combat roles.

Yet Gillard finds herself the subject of indignities that escape male politicians. The extent to which she’s finding respect hard to come by was apparent in a recent episode of the ABC’s At Home With Julia television comedy. It depicted Gillard lying naked under the nation’s flag after having sex in her office with her boyfriend, Tim Mathieson, and being interrupted by a colleague knocking at the door. Protesters annoyed with Gillard’s policies, including a carbon tax, have shown up bearing placards reading ”Ditch the Witch”.

Australia is a great country, and it’s not exactly a bastion of sexism, “Crocodile Dundee” stereotypes aside. Yet statistics showing Australia’s female board representation is almost half that of South Africa’s boggle the mind.

Discrimination exists, and if Australia doesn’t attack its blokey ways, investors may have reason to go walkabout.

Bloomberg