In your in­ter­est: Paul Clitheroe

Money Magazine Australia - - CONTENTS - IN YOUR IN­TER­EST Paul Clitheroe

OK, here we go again. This is close to the 20th crack at my views on in­vest­ing in the year ahead of us. Now that I think about it, 2019 will be Money mag­a­zine’s 20th birthday – who would have thought a mag­a­zine about money would go for two decades!

First, I’ll cheer up our le­gal team no end by dis­clos­ing that my crys­tal ball is hor­ri­bly flawed and I don’t re­ally have the first clue about short-term in­vest­ment trends any­way. I am not too bad at the long term. This is mainly be­cause I am not very clever, and I am painfully aware that as I still work for a liv­ing my pre­dic­tions can’t be much good any­way.

So for the long term I rely on com­mon sense. For­tu­nately, this seems to be in very short sup­ply or I would be out of a job. I look at pop­u­la­tion sta­tis­tics and the wealth of our pop­u­la­tion. Wealth comes from im­por­tant ar­eas, such as hav­ing a job.

Bar­ring a nu­clear at­tack, vir­u­lent plague or be­ing hit by an as­teroid, which I ac­cept are all pos­si­ble, the world’s pop­u­la­tion is grow­ing by about 93 mil­lion peo­ple a year. Glob­ally, the wealth of in­di­vid­u­als and fam­i­lies is grow­ing. We have made huge global in­roads into poverty. We are also liv­ing longer.

The forecast for Aus­tralia is for a pop­u­la­tion of some 35 mil­lion in about 25 years. For us each year is a lit­tle eco­nomic mir­a­cle. As we pot­ter around with our daily lives we buy all sorts of goods and ser­vices. This is what runs the en­gine room of the econ­omy. So more of us is good for in­vestors.

Right now we all see fall­ing prop­erty prices. This is long over­due and watch­ing the me­dia turn from “prop­erty prices to boom” to “prop­erty prices to bust” does cause me to laugh out loud.

I reckon the boom in prices went too far and we need a de­cent cor­rec­tion. But what will prices look like in, say, 25 years? I ar­gue they will be higher, much higher, due to pop­u­la­tion growth and the in­creas­ing wealth of our pop­u­la­tion.

So a weak mar­ket to a long-term in­vestor is a great op­por­tu­nity. Shares are hav­ing a bad time as well. But, again, this for me is an op­por­tu­nity. I in­vest on a reg­u­lar ba­sis, in par­tic­u­lar into my su­per­an­nu­a­tion, and right now I am buy­ing more shares for my dol­lar.

We should pause for a mo­ment and see what I said this time last year. I’ll just do a cut and paste: “I do not see the prop­erty bub­ble burst­ing in our big cap­i­tal cities but I ex­pect flat prices there and in most of the coun­try. I ex­pect in­ter­est rates to re­main low but with strong job growth and low un­em­ploy­ment I ex­pect wages to im­prove. So I can’t see rates go­ing any lower, and as we move into 2018 I’ll be look­ing for some small rate rises.

“The Aussie dol­lar re­mains a mys­tery to me. About all I ever get right is to see it as cheap when it gets close to 50¢ to the US dol­lar and ex­pen­sive when it gets to $1 to the US dol­lar, so for 2019 I’ll stick with a trad­ing range of 65¢ to 75¢. But I ex­pect I will be wrong for rea­sons I don’t yet know.

“Aus­tralian shares have un­der­per­formed other ma­jor mar­kets, and while they are not cheap they are also not ex­pen­sive. So I will con­tinue to in­vest in shares and add to my port­fo­lio, mainly in my su­per fund.”

As we pot­ter around with our daily lives we run the en­gine room of the econ­omy

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