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Morningstar's month in review

Mark LaMonica, CFA  |  06 Feb 2018Text size  Decrease  Increase  |  
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I hope everyone had a great start to 2018. Unlike the global equity markets, I hope that great start to the year has extended beyond Australia Day. Given the recent market declines, I thought a good place to start this retrospective was by looking at some of Peter Warnes commentary during January.

Your Money Weekly market commentary

Peter Warnes is the head of equities research for Morningstar Australasia and writes a weekly Overview that is published in the Your Money Weekly (YMW) newsletter.

Peter's writing is particularly timely given the recent market movements. I would encourage all Premium subscribers to go back and reread Peter's 2018 Forecast and the Overview sections of our January YMW issues. I pulled out a few quotes that I thought were particularly interesting:

"Welcome to 2018. Global equity markets have celebrated with a bang, apparently without a care in the world. If it was just that simple. I remain cautious and my New Year resolutions are: Preserve capital; reduce risk; and be satisfied with lower risk-adjusted total returns."
- Resolutions, geopolitical issues, the US$, and the oil price (12/1/18)

"US markets are highly unlikely to continue to surge at the rate of the opening week of 2018, where the S&P 500 and the Nasdaq Composite jumped by 2.6 per cent and 3.4 per cent respectively in the first four days. It is as if a new era has dawned. It hasn't. The economic and market cycles are as old as humanity as is greed, speculation, and fear. Believing 'this time it's different' is likely to prove costly. Continue to be aware, vigilant, and prudent."
- Resolutions, geopolitical issues, the US$ and the oil price (12/1/18)

"This is all very thought-provoking, and while I may be way too early in my call that 2018 could be a watershed year, as I mentioned in Forecast 2018 in mid-December, my rising bank balance and downside insurance allows me to sleep well at night."
- The Federal Reserve about to be tested (19/1/18)

"Short-sighted equity markets embraced the data (US GDP growth of 2.6 per cent), blinded by greed. CNBC's Mad Money host Jim Cramer makes a classic observation of investor behaviour in frothy markets with the comment: 'Bulls make money; bears make money; pigs get slaughtered.' I suggest, become squirrel-like."
- Davos and world trade in the spotlight (1/2/18)

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"Without forecasting closing year index levels, we believe the US and Australian equity markets will close 2018 at a lower level than the exit level of 2017. The magnitude and cause of a market correction is difficult to predict. Investors are currently oblivious to an exogenous factor but there is abundant fertile ground in which one can sprout."

"In 2017 global equities markets, led by the US, enjoyed a Trumping time. In 2018, they may well suffer a Thumping. Risk assets have enjoyed an extremely favourable environment. Excess liquidity, low interest rates and a high level of complacency have driven risk asset values to high, and in many cases, very stretched levels. US markets have been supported by significant growth in passive investments led by value-agnostic exchange-traded funds and a record level of share buybacks."
- Forecast 2018: Could it be a Dog of a year for financial markets? (14/12/17)

Morningstar Next adds SMSF capabilities

As you may be aware, we launched a new product called Morningstar Next in late 2017. Morningstar Next offers three fully diversified multi-asset portfolios. In January, Morningstar Next started to accept investments from SMSFs, which I think is something that will really resonate with our audience.

I'm proud of the product my colleagues have built. It is beautifully designed with a straightforward and simple sign-up process. I was the second investor and chose the cautious portfolio as a substitute for some money that I had sitting in a term deposit.

Like many of you, I really enjoy the intellectual challenge of researching and selecting my own investments. That said, I think Morningstar Next is a great addition to my portfolio and I would encourage you to take a look.

You can find the portfolios here or feel free to learn more about the product by calling our client service representative, Mark McPhee, on 1800 316 544 or by using the live chat feature which can be found in the bottom right hand corner of the Morningstar Next homepage

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Mark LaMonica is a product manager, individual investor business, Morningstar Australia. Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is a product manager, individual investor, Australia.

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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