http://iml.com.au/IML/pdf/news/02_2016_Market_Musings_Sustained_Sluggishness.pdf

 

The link above is an interesting “muse” on the drivers of the current global position….debt rising appreciably in government and households, commodities bubble bursting, share buy-backs distorting balance sheets and prices plus a view that all is well and will continue to be so.

I like reading this sort of article and hope you will too.

Investment nowadays is more complex than in the past owing to the sheer volume of available information – largely rubbish – upon which to rely.

Superannuation members are often oblivious of what their underlying fund managers are doing and there is a large herd mentality in my opinion.  Owing to the large amount of money in traditional asset classes which follow various indices, we run the risk of self fulfilling prophecies occurring with no real diversity to protect the portfolio.

Any retirees reading the article may well become a little less confident of the medium term future especially if the comments do become reality around paying back the debt (or rather not).  The ensuing dislocation of a lender and a borrower suddenly has impact across the world – just like the highly geared  mortgage backed securities that led to the GFC where there was banking chaos.   ONly this time, the QE has been massive and I personally dont know how it can be unwound without a major population increase and very high inflation.  Something that is unlikely.

What is the alternative?

Talk to your trusted adviser and ask the difficult questions and demand true diversity.  If they cannot deliver that owing to legislative constraints, then talk to us at Financial Planning 4 Life.