Another year almost done! Thanks again for your support and engagement over 2023. With every year being one of change, challenge, and opportunity, we’ve thoroughly enjoyed hearing from you, helping you, and meeting with you over the course of the year.
We look forward to the same in 2024.
What did we learn in 2023?
We have to admit these days most of the things we “learn” are really just reminders of things that remain constant in finance. Not that this is a bad thing. Repetition of important principles is really what keeps us all on track. There’s four evidence-based principles that stand the rest of time:
Markets work.
Risk is related to reward.
Diversification is the only free lunch.
Asset allocation largely determines portfolio performance.
And then there’s one principle that’s always an ever-changing variable:
Discipline.
But even discipline is backed by evidence. Data regularly shows a lot of money flows into funds after they’ve gone upwards and flows out after a period of less-than-ideal performance. It suggests many investors chase returns and try to avoid further losses, and in the process get very little for themselves. And that’s just one piece of poor behaviour, discipline touches many areas because anything can prompt a poor decision and cost returns.
After a strong January, the Australian market basically drove into a mud pit and spent most of the year doing a burnout trying to extricate itself. It got traction in November and has climbed back towards where it was at the end of January. With dividends, it should be around a 10% return for the year. Globally, markets will likely end up double that figure.
However, if you’d believed the predictions of a well-known investment bank you might have liquidated your portfolio and enjoyed none of it.
The stock market will fall 25% when the looming US recession hits in mid-2023, Deutsche Bank says
The Year Ahead
The Christmas table might be a place for good stories, but take any great investment tips you’re gifted with a grain of salt. Don’t indulge Cousin Greg’s forecasting. Whether that be forecasting for recessions, how the market itself will perform, or his sure-fire individual stocks that are poised to rocket in the coming year.
Take this video from investment site Livewire, who regularly interview fund managers and stockbrokers on their best tips and forecasts. As part of that, they’ve thankfully turned their attention to asking what those fund managers and stockbrokers didn’t get right in 2023.
We could say credit to them for fronting up, but these are taken from wider interviews they’ve appeared in for promotional reasons. They’re really indulging this lookback on mistakes so they can also talk up their best picks for 2024, and did they really cough up everything they got wrong? They were a little slippery!
You might say active fund managers are up there with politicians for avoiding the actual question. It’s a skill to respond to a totally different question with answer that paints them in the best possible light! As evidenced by many of them turning the question away from something that they outright got wrong, towards the more palatable “one that got away”. Specifically, a stock or area of the market they didn’t own, and they wish they did.
No surprise because none of us can see the future, and that’s where we’ll leave our thoughts on the year ahead. There are no working crystal balls out there.
Awareness and Self-Care
At this time of year, we usually remind you (mostly the males) about being mindful about climbing ladders, trimming trees, or cleaning out gutters. Just anything to do with heights. This stems from a client who took things into his own hands, came off a ladder, and ended up in the emergency room with a cracked vertebrae. The client in question is still in pain, unable to sit for long periods and still relying on his now very valuable insurance.
And while that’s an always important reminder, at the end of this year we’d like to underline the continuing dangers of online scams and issues with financial transfers. There are too many to even list and they’re coming from all angles. Whether it be people pretending to be your family members, celebrities and business people being spoofed, or just emails being intercepted and details being changed without your knowledge, resulting in your money disappearing into thin air.
We can’t stress enough, double, and triple check everything, and if something doesn’t seem right, do not proceed. Wait until there is confirmation you absolutely have the details correct in person or over the phone from someone at the actual intended recipient. Do not just plough ahead and send money with the idea that “somebody, somewhere” is out there looking out for you. All evidence says they aren’t, and recovering money is a hard slog. Losing money to a scammer and having to chase it is extremely emotionally laborious and dispiriting.
If you have to do any transfer, and the most recent contact you’ve had with the intended recipient prior to the transfer is via email, or a text-based message, call them one final time to check the details.
If you can, turn on third party authorisations and use authentication apps to get into accounts. Also take advantage of online vaults to store documents, it’s another level of safety. Yes, the authenticator apps are annoying, but it’s just another layer of security and it ensures logins are done in your presence.
Finally, don’t ever quote usernames, passwords, or security codes to anyone who calls you.
Who knows, all this digital scamming might have us pivoting back to paper and the postman!
Our Best of 2023
Affinity AI: Another reminder that the intent to scam can now be combined with the ever-increasing sophistication of artificial intelligence.
Does Portfolio Construction Matter? A lot of investors source their portfolio ideas online, and they’re prescribed a one size fits all, keep it simple stupid, portfolio, but they’re not given any idea of the potential downside.
Inside a Positive Retirement: The question of how to spend our retirement or just the final third of our lives, is one that we’ll all need to answer at some point. The longtime host of “Inside the Actors Studio”, James Lipton provides some inspiration.
Quarterback Money Blues: College football star and NFL #1 draft pick, Baker Mayfield, petitioned a court to find out where $12 million managed by his family had gone. It was a potential dereliction of duty on several fronts.
Disney Shows Nostalgia No Way to Invest: With a legacy of family friendly TV shows and movies, inbuilt goodwill, and merchandising, you’d think Disney would be a bulletproof business. Lately it’s run into some hurdles.
Other interesting stories to read over the holidays.
What Happens to All the Stuff We Return? Online merchants changed the way we shop—and made “reverse logistics” into a booming new industry.
The Secret Life of the 500+ Cables That Run the Internet: Laced across the cold depths of the world’s oceans is a network of multimillion-dollar cables, which have become the vital connections of our online lives.
The Trillion-Dollar Grift: Inside the Greatest Scam of All Time. The pandemic relief was the biggest bailout in history, and it opened the door to wide-scale fraud the likes of which no one had ever seen — more than three years later, we still don’t know how much damage was done.
Martin Scorsese: “I Have To Find Out Who The Hell I Am.” Now 80, the legendary director is on one of the most creative runs of his career— and consumed by the challenges (and opportunities) of all that he has left to do.
Finally, a trailer for a documentary we’re looking forward to next year. The story of some of the people who’ve shaped our investment philosophy.
With that, the MFG office will be closed from Thursday 21 December at 4pm and we will reopen on Monday 8 January 2024.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
