On Tuesday (19th February 2019) one of our adviser assistants, John Koutsouroupas (or JK as we affectionately call him) was fortunate enough to attend an exclusive event hosted by Dr Shane Oliver (Chief Economist at AMP Capital). Upon returning we decided to pick his brain a little, here is what he had to say about the economic conditions and outlook.
"February was a particularly good month for share markets around the world. This was largely influenced by easing tensions between the US-China Trade War and the ending of the US Government Shutdown. Locally, we also saw Australian Shares improve significantly. This was caused by not only the events in the U.S. but also increasing expectations that the Reserve Bank will lower interest rates.
The property market continued to experience low clearance rates and falling house prices. Currently, house prices should not be a concern for investors and households. Unemployment remains low, meaning that the borrowers are still relatively able to meet their mortgage repayments.
Next month we expect Melbourne & Sydney clearance rates to increase, this is typical of February. We also expect continued volatility in overseas share markets as the US Congress reinstates the country’s Debt Limit. This uncertainty is also expected to be reflected in local share markets.
On a lighter note, the Australian economy remains stable and economic growth is expected to continue until at least 2020, supported by expected interest rate cuts."
Collectively at AFA Group Wealth, we believe that investing is a long-term game, therefore we need to stay resilient during these volatile times. Historically share markets perform best after times of increased uncertainty and fear. As a result, it is important to maintain exposure during these times to maximize portfolio returns. ‘Time in the market’ not ‘timing the market’ is key to investment success.
We stress the importance of regularly reviewing our clients’ personal and financial situation to ensure that their portfolio is resilient and that they are comfortable with the market fluctuations that the portfolio is experiencing.
For many of our clients who have a long-term investment horizon, current market conditions can be tolerated and will be beneficial in the long term. For our clients who have a shorter investment timeframe, they may need to review their current situation to ensure that it is resilient during these times. If you would like to further discuss this or would like to organize a review, please do not hesitate to contact our office.